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Nvidia’s muted reaction keeps tech on edge, with chipmakers in focus.
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Nasdaq’s 20980-21000 support holds—for now. A break could mean trouble.
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With Nvidia done, GDP today and Core PCE Friday take center stage.
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US equity futures edged higher, tracking a firmer tone in Asia Pacific markets overnight, with Europe trading mixed shortly after the open. The tech sector, and consequently, Nasdaq 100 will remain in focus following Nvidia’s (NASDAQ:NVDA) earnings, with its share up around 1% in pre-market after delivering results on Wednesday that were solid but not spectacular.
Investors, accustomed to blockbuster results, have so far responded with a rather muted reaction. Nvidia’s performance today will be key and could set the tone for the next few sessions in the sector. The technology sector and specifically chipmakers will remain at the center of market volatility, with recent losses keeping investors on edge amid concerns about valuations and the latest US crackdown on China’s technological progress.
The focus is now turning to the US GDP release later today and Core PCE data on Friday. Before we discuss those macro events and more, let’s have a quick look at the Nasdaq’s chart first.
Nasdaq Technical Analysis and Key Levels to Watch
Following the recent drop, the Nasdaq has worked off its short-term overbought conditions further, as it continues to trade inside a range it has been stuck inside since December.
The loss of bullish momentum has so far not caused any major breakdowns of key support levels to scare away the bulls just yet. They continue to buy the dips, but their inability to create a new all-time high so far this year may be a sign of concern, requiring a correction of some sort to make the tech sector appealing again.
One key support area to watch on the Nasdaq futures is around 20980-21000, which roughly corresponds with a major high from July 2024. This area has been tested on several occasions in recent weeks and so far, the bulls have prevailed. In light of the recent struggles in the tech sector, though, you would feel that a potential breach of this 20980-21000 area on a closing basis could see the onset of a potentially sharp correction, which could send the index tumbling to around its long-term 200-day moving average.
However, if the abovementioned support continues to hold – as it may have been the case following this week’s retreat – then the bulls wouldn’t be too worried. A couple of short-term broken support levels need to be reclaimed though before the index starts looking bullish again, starting with 21400/20 area, which is now the bears’ first line of defence. Above this, the 21-day exponential average comes into focus at around 21650, then the next target is at 21950, the low from last Thursday and base of the recent breakdown.
Nvidia’s Earnings Fail to Excite
The lukewarm reception to Nvidia’s outlook comes at a precarious moment for the AI industry. Recent developments, such as Chinese startup DeepSeek’s demonstration that chatbots can be developed at a fraction of the expected cost, have sparked concerns that the demand for Nvidia’s high-powered chips could diminish.
Whether Nvidia’s results will be enough to assuage fears about the shifting dynamics in the AI sector remains to be seen. However, judging by the tepid response in its share price, one might be forgiven for harboring doubts.
Watch NVDA closely if you trade the Nasdaq. Today’s performance for this hugely important stock could have major implications for the main US indices.
Tariffs: A Tale of Confusion
Donald Trump’s contradictory statements on Wednesday regarding the implementation of tariffs left investors scratching their heads. One area of confusion is about European levies, which could either target all exports from the bloc or focus on specific sectors. Another one is regarding the USA’s closest neighbors. The Trump administration appears poised to impose tariffs on Mexico and Canada, though it’s unclear whether these will come into effect as early as March.
So, the tariff situation is, frankly, a bit of a muddle. On one hand, we have bold statements from Trump; on the other, ongoing negotiations leave room for delays or extensions. Investors are still trying to decipher what’s actually at play. So far, it’s been more noise than substance. For that reason, investors have largely shrugged off trade war concerns and have bought stocks on the dips.
Key Macro Data This Week: GDP and Core PCE
With Nvidia’s earnings now out of the way, attention shifts back to tariffs and the ongoing Ukraine peace talks. On the macroeconomic front, today brings US GDP data and initial jobless claims, alongside further speeches from Federal Reserve officials. Come Friday, the focus will turn to the Fed’s preferred inflation measure—the core PCE price index—alongside a smattering of second-tier data releases.
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Disclaimer: This article is written for informational purposes only; it does not constitute a solicitation, offer, advice, counsel or recommendation to invest as such it is not intended to incentivize the purchase of assets in any way. I would like to remind you that any type of asset, is evaluated from multiple perspectives and is highly risky and therefore, any investment decision and the associated risk remains with the investor.