Nasdaq 100 futures extended their decline today as investors sold off leading artificial intelligence stocks. The index fell to 28,770, which is 8.35% below its high for the year and its lowest level since August 3. This sell-off may continue in the near term, with traders focusing on the psychological level of 28,000 points.
Nasdaq 100 futures fall as AI trade starts to unwind
The Nasdaq 100 Index futures have continued their downward trend this week as some of the biggest constituents fall. Alphabet stock tumbled to $280, down by over 30% from the year-to-date high.
Amazon, another top company in the index, dropped to $226, down by 21% from the year-to-date high. Intel stock fell to $67 from the record high of $142, while Nvidia, the biggest constituent, fell from the all-time high of $243 to $213.
Other top companies in the Nasdaq 100 Index like ServiceNow, Adobe, and Microsoft, have all slumped by double digits from their all-time highs.
The ongoing sell-off has accelerated during the ongoing earnings season. Intel’s stock plunged after its PC revenue slumped in the last quarter, while supply chain issues intensified.
Amazon, on the other hand, dropped as its earnings missed estimates on the top and bottom line. At the same time, the company now expects to spend $220 billion, with the growing capex leading to a negative free cash flow. Its FCF was worse than what analysts were expecting.
Alphabet stock continued its strong downward trend after the company’s core search and advertising business deteriorated.
The core theme during this earnings season is that the core businesses are slowing, while the capital expenditures are accelerating. Also, investors are worried that these companies will continue their dilution to fund their AI expansion. Indeed, Meta Platforms announced that it is raising over $90 billion, with Nvidia contributing $2 billion.
Crypto stocks drop after Binance hack
The Nasdaq 100 Index is also falling after North Korean hackers breached Binance and drained $6.3 billion in the biggest hack in the crypto industry. Circle and Tether managed to freeze $3 billion of their stablecoins, with the hackers managing to take the rest.
The hack has led to concern on the safety of the crypto industry since Binance is the biggest company in the sector. Binance is often seen as the gold standard in the industry. As a result, there are concerns other top companies in the sector will be hacked. That explains why companies like Coinbase and Gemini are falling.
Hawkish Federal Reserve
The Nasdaq 100 Index futures are also falling as investors react to the recent statement by the Federal Reserve. Officials decided to leave interest rates unchanged between 3.75% and 4%, with Beth Hammack and Lisa Cook voting to hike them.
Analysts now expect that the bank will hike interest rates in the coming meeting. Besides, the US released strong third-quarter GDP data, higher than what analysts were expecting.
Nasdaq 100 Index technical analysis
Nasdaq 100 chart| Source: TradingView
The daily chart shows that the Nasdaq 100 Index futures have been in a strong sell-off this month. They have now dropped below the crucial support level of 28,796, the lowest swing in September and October. Moving below that level confirmed the bearish outlook.
The index has also slumped below the 50-day moving average. It has also dropped below the lower area value of the fixed range volume profile. Therefore, the path of the least resistance is lower, with the next key target being at 28,000.
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