Nasdaq Index: Alphabet and Amazon Drag US Indices Lower Before CPI Report

Alphabet and Amazon Drag the Nasdaq Lower Ahead of CPI

Two stocks are doing all the damage. Alphabet and Amazon both fell about 2% or more Tuesday afternoon and their combined market weight pulled the Nasdaq Composite into negative territory while most of the index traded higher.

Advancing issues outnumbered decliners by 1.38-to-1 and the index posted 79 new 52-week highs against 63 new lows. That is not a technology exit. That is the biggest names getting sold ahead of Wednesday’s inflation print while the rest of the Nasdaq holds its ground. The index is testing a key pivot at the mid-session and the reaction there should set the tone into the close.

The Nasdaq Composite was at 26,413.217 at 18:23 GMT, down 192.14 points or 0.72%.

Daily Nasdaq Composite Index (IXIC) Technical Analysis

The Nasdaq Composite is lower late in the session on Tuesday after failing for the fourth day to take out last week’s high at 26739.00 to continue the rally that began on July 29.

The minor trend is up and the main trend is up. However, a trade through 26208.43 will change the minor trend to down. This will also shift momentum to the downside.

The minor range is 26739.00 to 26208.43. The index is currently testing its 50% level at 26473.72. Trader reaction to this pivot should set the tone into the close.

A sustained move over 26473.72 will indicate the presence of buyers. If this generates enough late session momentum, traders may make a run at taking out 26739.00. A sustained move under the pivot will be potentially bearish. It could lead to a late session test of the minor swing bottom at 26208.43.

A trade through 26208.43 could lead to a quick test of Fibonacci support at 26134.00. This is a potential trigger point for an acceleration into the 50-day moving average at 25925.04.

Alphabet and Amazon Are Not Selling on News

Neither stock had a company-specific headline Tuesday. The selling is position reduction ahead of CPI in the two largest growth names on the index. Buyers are holding smaller names and selective chip stocks but they are not putting fresh capital into mega-cap technology with the inflation number 18 hours away.

Nvidia was up slightly after Monday’s $500 billion financing commitment for AI data-center infrastructure. That gain was not enough to offset Alphabet and Amazon. The AI trade is intact. The willingness to chase the leaders into an inflation print is not.

Oil Above $83 Keeps Rebuilding the Rate Argument

WTI above $83 with the Strait of Hormuz still restricted is not helping the Nasdaq recover. The technology group rallied when the payrolls miss weakened the hike case. Oil moving higher puts that case back together one session at a time.

The Nasdaq can handle crude near $83 for a day. A continued climb that pushes yields and inflation expectations higher ahead of the September meeting is a different problem, and Alphabet and Amazon getting sold Tuesday says some traders are not waiting to find out.

CPI Decides Whether This Stays Narrow or Spreads

Wednesday’s number is the fork. A soft print gives buyers a reason to come back into Alphabet, Amazon and the rest of the growth group. It takes pressure off yields and lets Tuesday’s pullback stay a one-day pause inside an uptrend.

A hot print turns the selling from narrow to broad. Higher oil, firmer yields and rising hike odds would hit the same high-multiple names that have led the Nasdaq off its July low. The index has recovered sharply but it is still more than 2% below its record. That leaves buyers with a trend worth defending and sellers with an inflation report that could test it.

What to Watch

The decline is Alphabet and Amazon, not the Nasdaq. Breadth is positive, Nvidia is holding and the index is not showing the kind of broad selling that signals a technology rotation. CPI Wednesday decides whether that distinction holds. A contained print brings the mega-cap bid back. A hot print with crude above $83 gives sellers the argument they need to press the index through the rest of the week.

The fourth consecutive failure at last week’s high leaves the Nasdaq stuck below resistance. The pivot at the midpoint of the minor range is the level that matters into the close. A hold above it keeps buyers in position for another attempt. A break below it shifts momentum toward a test of the minor bottom and the 50-day moving average below that.

More Information in our Economic Calendar.