S&P 500 And Nasdaq 100: OpenAI Concerns, Oil Surge Hit US Stocks

Tech Stumbles on OpenAI Report, Oil Keeps the Pressure On

Record highs on Monday. Sellers on Tuesday. The Wall Street Journal dropped a report on OpenAI that hit chipmakers hard and June WTI crude oil pushing back toward $100 gave the rest of the market a reason to follow. The S&P 500 and Nasdaq are both lower. The Dow is holding because Coca-Cola is having a good quarter.

Technical Outlook

The S&P 500 Index (SPX) gapped the opening on Tuesday. By definition, since it took out yesterday’s low, yesterday’s high at 7178.74 is the new minor top.

The minor range is 7046.55 to 7178.74. Its 50% level at 7112.65 is the first downside target. This is followed by Gann angle support 7088.40. If it fails, the market could sell off sharply to the minor bottom at 7046.55. Taking out this indicator changes the minor trend to down and shifts momentum to the downside.

The intermediate range is 6790.02 to 7178.74. Its retracement zone at 6984.38 to 6938.51 is the primary downside target. Since the main trend is up, buyers are likely to come in on the initial test of this area.

Traders should also note that since we had a higher-high on the weekly chart on Monday, the clock is ticking on a potential weekly closing price reversal top. The key level to watch is last week’s close at 7165.07.

The Nasdaq Composite (IXIC) is also under pressure shortly after the opening on Tuesday. A new minor top has formed at 24889.37, creating a minor pivot at 24544.19. Trader reaction to the minor pivot should set the tone for the day.

If 24544.19 fails, the next support is the Gann Angle at 24253.00. With the main trend up, we could see new buyers step in on a break into this angle. If it fails, look for losses to possibly extend into the minor bottom at 24199.00.

Taking out the minor bottom will shift momentum to the downside and change the minor trend to down. This could trigger a further break into the short-term retracement zone at 23842.60 to 23595.56. Look for new buyers on a test of this area.

Last week’s close was 24836.60. Since we are inside the window of time for a closing price reversal top, traders should watch this level all week and especially on Friday.

The OpenAI Report That Hit the Sector

The Wall Street Journal reported that OpenAI’s recent revenue and user growth came in below its own internal expectations. CFO Sarah Friar raised concerns internally about whether the company can meet future computing contract obligations if growth does not accelerate. That was enough to send chipmakers lower across the board. Nvidia fell more than 2%. Broadcom dropped about 4%. Advanced Micro Devices and Intel each declined around 4% and Oracle lost roughly 5%.

June WTI crude oil pushed 3% back above $99 per barrel. Spot Brent crude gained 2% above $110. The U.S.-Iran talks that were supposed to happen got called off with no meetings currently scheduled. I’ve watched oil do this before. It does not need a fresh headline every session to keep climbing. The supply is not there and every day the talks go nowhere is another day that gets priced in.

The Dow is bucking the trend and Coca-Cola is the reason. A 5% jump on an earnings beat in a defensive consumer name on a day like this is not random. Money is moving toward safety. That is different from leaving the market entirely.

What to Watch

Alphabet, Amazon, Meta Platforms, and Microsoft all report Wednesday. Apple is Thursday. I’ve seen this setup before. Elevated expectations after a big run mean the bar is high and the market is not forgiving right now. One miss on guidance from any of those names and the selling we saw Tuesday looks like a warm-up. The weekly closing price reversal top window is open on both the S&P 500 and Nasdaq. Friday’s close is the one that matters most this week.

More Information in our Economic Calendar.