SP500 Tests Support At 7390 – 7400
SP500 is under huge pressure as traders sell tech stocks amid worries about AI. Traders worry that Democrats will increase regulatory pressure on AI, hurting the sector at an unfortunate time.
Free cash flow of tech leaders has already moved into negative territory, and some companies are forced to sell debt to raise funds for AI investments. Earnings reports showed that AI has already started to hurt the traditional business of tech companies, while AI monetization lagged.
The strength of the sell-off will certainly raise worries that “AI bubble” is about to burst. NVIDIA, which is the undisputed leader in the AI space as it provides key chips for hyperscalers, is down by -8% in today’s trading session.
The strong sell-off in NVIDIA stock is a major warning sign for the bulls. In case NVIDIA continues to move lower, the broader market will find itself under more pressure.
Treasury yields moved lower as traders searched for safe-haven assets. The move did not have any impact on stock market dynamics today.
The sell-off was broad, and all market sectors were moving lower in today’s trading session. Tech stocks were among the biggest losers amid AI-related fears. Consumer defensive and utilities stocks outperformed, supported by falling Treasury yields. Energy stocks declined despite the strong rebound in the oil markets.
Currently, SP500 is trying to settle below the support level at 7390 – 7400. In case this attempt is successful, SP500 will head towards the next support, which is located in the 7310 – 7320 range. RSI is close to oversold territory, but there is enough room to gain additional downside momentum in the near term.
On the upside, a move above the 7400 level will push SP500 towards the nearest resistance at 7470 – 7480.
NASDAQ Tests Multi-Month Lows As Traders Rush To Sell AI Stocks
NASDAQ suffered a strong sell-off as traders rushed to sell tech stocks. Sandisk, which is down by -18%, is the biggest loser in the NASDAQ index today. The stock is under strong pressure as traders worry that potential regulations will hurt data centers and reduce demand for Sandisk’s products.
NASDAQ declined below the previous support at 27,100 – 27,150 and is trying to settle below the 26,800 level. In case this attempt is successful, NASDAQ will move towards the nearest support, which is located in the 28,450 – 28,500. A successful test of the support at 28,450 – 28,500 will push NASDAQ towards the next support level at 25,950 – 26,000. RSI has recently moved into oversold territory, but there is enough room to gain momentum in case the right catalysts emerge.
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See all Dow Jones forecastsDow Jones Retreats As NVIDIA Dives 8%
Dow Jones has also found itself under strong pressure amid broad sell-off in the equity markets. NVIDIA was the worst performer in the NASDAQ index today.
The nearest support level for Dow Jones is located in the 51,400 – 51,500 range. If Dow Jones manages to settle below the 51,400, it will head towards the next support at 50,600 – 50,700. On the upside, a move above the 52,000 level will push Dow Jones towards the resistance level at 52,300 – 52,400.
For a look at all of today’s economic events, check out our economic calendar.