Nasdaq Slips From Record as PayPal Drags and Traders Brace for Fed, Apple, Amazon

Nasdaq Slips Slightly as Traders Eye Fed Decision and Tech Earnings

The Nasdaq Composite edged lower by 0.01% to 21,176.92 on Tuesday, giving back early gains after setting a fresh intraday high. The S&P 500 dipped 0.05% to 6,386.68, and the Dow Jones Industrial Average fell 0.35%, or 154.97 points, to 44,682.59. Caution dominated ahead of a pivotal Federal Reserve rate decision and heavyweight tech earnings.

Despite minor index losses, the Nasdaq found support from semiconductor strength and select software names. Still, broader sentiment remained muted, weighed by mixed corporate results and a softening labor market backdrop.

Are Semis and Software Still Carrying the Nasdaq?

Semiconductor stocks drove early upside, with Cadence Design Systems and Synopsys surging over 7% each on earnings beats. AMD and Marvell gained 4.2% and 2.8%, respectively, reinforcing bullish momentum in chipmakers. Micron and Broadcom also closed in the green.

However, pressure from PayPal’s 8.5% drop and softness in Tesla and ASML dragged on the index. Tesla fell 1.3%, while PayPal was the day’s worst performer after weaker guidance. Communication and discretionary names underperformed, eroding some of the Nasdaq’s tech-led strength.

Which Sectors Showed Relative Strength and Weakness?

Defensive sectors outperformed, with utilities up 0.94% and real estate gaining 0.82%. Consumer staples rose 0.58% following Procter & Gamble’s solid forecast and leadership update.

Industrial and consumer discretionary sectors lagged. Boeing’s drop weighed on industrials, while UPS and Whirlpool disappointed with weak prints and no forward guidance. The Industrials sector slipped 1.03%, while consumer discretionary fell 0.74%. Materials also lost ground, down 0.63%.

How Are Traders Positioning Ahead of the Fed and Jobs Data?

Markets treaded lightly ahead of Wednesday’s Federal Reserve decision. The central bank is widely expected to hold rates, but traders will monitor Fed Chair Powell’s comments for clarity on future policy direction.

Labor market data added to the cautious tone. Job openings fell to 7.44 million in June, the lowest since March, and quits declined to 3.14 million. Traders are now eyeing Friday’s July nonfarm payrolls report, with expectations for a 100,000-job increase and a tick higher in unemployment to 4.2%.

Market Outlook: Can Nasdaq Hold Its Record or Is a Pullback Due?

With over 83% of S&P 500 companies beating earnings expectations, investor focus now turns to upcoming reports from Microsoft, Apple, Amazon, and Meta. Positive results could reignite momentum for the Nasdaq, but soft labor data and Fed uncertainty could stall gains.

Key support for the Nasdaq sits near 21,050. Resistance remains around 21,304. A strong close above this level, driven by upbeat tech earnings, may open a path toward 21,500. Traders should monitor post-Fed reaction and Friday’s jobs print for cues on near-term direction.

More Information in our Economic Calendar.