Nasdaq Fails at the 50 Daily SMA, Awaiting Nvidia Earnings

Nasdaq rebounded higher off the 200 daily SMA this month after the retreat in July, but buyers are finding it hard to break above the 50 SMA on the daily chart. Risk sentiment improved as markets were anticipating FED’s Powell to announce the start of policy easing, and since he did so on Friday, markets have been holding in a tight range.

Nasdaq Chart Daily – Buyers Unable to Push Above the 50 SMA

Stock Market Overview

Recently, the general market trend has been characterized by a weaker dollar and stronger stocks, driven by expectations that the Federal Reserve (Fed) will soon begin lowering interest rates. Despite this positive sentiment, buyers have struggled to break through the 50 SMA and the 20,000 point mark. Today, the Nasdaq experienced a bearish reversal, closing with a 1.5% loss. Although the Nasdaq opened higher, it quickly reversed course and remained stagnant for most of the day. Small-cap stocks initially rose but lost momentum, while the tech sector slumped amid growing concerns about Nvidia’s upcoming earnings announcement on Wednesday. In contrast, the Dow Jones closed at a fresh record high.

Nasdaq Decline and Market Sentiment

Today’s decline in the Nasdaq may have been signaled earlier. Last Friday, Fed Chair Jerome Powell delivered a dovish speech at the Jackson Hole Symposium, hinting at the possibility of a 50 basis point rate cut at the September meeting. Despite this dovish tone, the Nasdaq did not experience a sustained surge. This lack of momentum could be tied to a pattern observed in early July. Notably, the Russell 2000 has extended its gains to new highs, outperforming the main indices, suggesting that the Nasdaq’s lack of follow-through may be due to sector rotation.

Tech Stock Performance and Investor Focus

Investors and traders saw significant gains in the technology and telecom sectors, with additional strength in consumer cyclicals and semiconductors. Nvidia (NVDA), a notable market leader, posted a modest gain of +0.28%. However, the broader technology sector faces challenges, as reflected in the stock price declines of companies like Advanced Micro Devices (AMD) and Broadcom (AVGO). These mixed signals indicate that while some areas of the market are thriving, others are struggling to keep pace, adding to the overall uncertainty in the market.

Monday Close for Main Stock Indices

• S&P 500 Index: Declined by 0.4%, reflecting cautious investor sentiment and concerns over potential market volatility.
• Nasdaq Composite: Dropped by 1.0%, indicating weakness in the technology sector, partly due to investor concerns about upcoming earnings announcements, such as Nvidia’s.
• Dow Jones Industrial Average (DJIA): Rose by 0.1%, setting a new record high. This increase was driven by strong performance in blue-chip stocks, suggesting investor confidence in established companies.
• Russell 2000: Increased by 0.2%, continuing its recent trend of outperforming larger indices. This rise points to ongoing interest in small-cap stocks, which may be seen as offering better growth potential in the current economic climate.
• Toronto S&P/TSX Composite Index: Gained 0.3%, boosted by strength in sectors like energy and materials, which benefited from rising commodity prices and ongoing global demand.

Nasdaq Live Chart