NASDAQ Index, SP500, Dow Jones Forecasts – NASDAQ Dives As Cisco Plunges 11.5%

SP500 Retreats Amid Commodity Market Sell-Off

SP500 is under strong pressure as traders worry about high AI spending, react to economic reports and prepare for tomorrow’s inflation data.

Initial Jobless Claims report indicated that 227,000 Americans filed for unemployment benefits in a week, compared to analyst consensus of 222,000. The previous report was revised from 231,000 to 232,000.

Existing Home Sales declined by -8.4% month-over-month in January, compared to analyst forecast of -3.4%. Severe weather may have impacted Existing Home Sales, so it’s too early to tell whether this report highlights the slowdown in the housing market.

Tomorrow, traders will focus on inflation data for January. Analysts expect that Inflation Rate declined from 2.7% in December to 2.5% in January. Core Inflation Rate is expected to decrease from 2.6% to 2.5%. Higher-than-expected inflation numbers will likely put pressure on stocks as traders will bet on hawkish Fed.

The pullback is broad, and most market sectors are moving lower in today’s trading session. Basic materials stocks were among the biggest losers today as traders reacted to the sell-off in silver markets. Silver is down by as much as 10%, while gold pulled back by 3%.

Energy stocks have also found themselves under strong pressure as traders focused on the pullback in the oil markets.

Tech stocks were among the losers today amid AI-related worries. Investors believe that high AI spending will hurt the financial performance of tech leaders.

Consumer defensive and utlities stocks were among the gainers today amid rising demand for safe-haven assets. Falling Treasury yields have also provided support to these sectors.

Currently, SP500 is trying to settle below the support level at 6870 – 6880. In case this attempt is successful, SP500 will move towards the next support, which is located in the 6800 – 6810 range. RSI remains in the moderate territory, so there is enough room to gain additional momentum in the near term.

NASDAQ Is Under Pressure As Traders Focus On Cisco Report

NASDAQ pulled back amid sell-off in the tech sector. Applovin, which was down by 17.6%, was the worst performer in the NASDAQ index today.

The stock declined as traders reacted to the company’s earnings report. Applovin beat analyst estimates on both earnings and revenue, but traders worried that AI would disrupt the company’s business.

Cisco was down by 11.5% after the release of its earnings report. The company beat analyst estimates but presented a cautious margin outlook.

From a big picture point of view, traders are worried that high AI-related spending will hurt margins of tech companies. Cisco’s report confirmed such fears, so traders rushed to sell tech stocks.

From the technical point of view, NASDAQ pulled back towards the support level at 24,700 – 24,750. If NASDAQ manages to settle below the 24,700 level, it will head towards the next support at 24,200 – 24,250.

Dow Jones Tests Support At 49,500 – 49,600

Dow Jones pulled back amid broad sell-off in the equity markets. Cisco was the worst performer in the Dow Jones index today.

Apple, which was down by 5%, was among the biggest losers in the index today. Unlike its peers, Apple does not spend too much money on AI projects. However, traders prefer to take profits near historic highs amid broad sell-off in the markets.

Walmart tested new highs amid strong demand for safe-haven assets. Sector rotation continues as investors sell tech stocks and put money into companies that should not be disrupted by AI.

Dow Jones is trying to settle below the support at 49,500 – 49,600. A successful test of this level will push Dow Jones towards the next support at 48,700 – 48,800.

For a look at all of today’s economic events, check out our economic calendar.