Nasdaq Slides 2% as Hot Inflation Data Pushes Treasury Yields Above 5.3%

Key Takeaways

• The Nasdaq Composite fell about 2% on Wednesday towards 29,900, underperforming the S&P 500, which lost around 1.1%.
• September headline CPI rose to 3.7% year on year, above the 3.6% forecast, while core CPI came in at 2.6%.
• The US 10-year Treasury yield moved above 5.3%, adding pressure on technology valuations.
• Nvidia, AMD, Broadcom and Oracle were among the AI-related names hit by renewed selling.
• Traders are watching 29,880-29,900 as resistance, with 29,860 as the first support.

The Nasdaq is under pressure as sticky inflation lifts yields and drags on technology stocks, with the short-term technical picture favouring sellers unless prices recover above nearby resistance.

Why Traders Are Watching the Nasdaq

The Nasdaq came under heavy selling on Wednesday, 14 October, after September’s CPI showed headline inflation accelerating to 3.7% annually. Core CPI also beat expectations, adding to concerns that price pressures remain persistent. The nine-period moving average has turned lower, with the latest price trading below it, which points to weakening short-term momentum.

Higher inflation expectations pushed Treasury yields up. Rising yields make fixed income more attractive and reduce the present value of companies’ expected future cash flows, which hits technology stocks particularly hard. That is a challenge for AI and semiconductor leaders whose valuations rest on continued revenue growth and AI infrastructure spending.

Key factors influencing the Nasdaq include:

• Inflation: Hotter-than-expected CPI reinforces concerns that price pressures are persistent.
• Treasury yields: A 10-year yield above 5.3% weighs on growth and technology valuations.
• AI and semiconductor valuations: Nvidia, AMD and Broadcom are sensitive to any shift in rate expectations.
• Federal Reserve policy: Renewed expectations of tightening keep pressure on equities.

Key Trading Levels

NASDAQ100ft is trading near 29,868, after retreating from an intraday recovery near 29,940.

The 29,880-29,900 zone is the first important resistance area, where price has reacted repeatedly. A sustained move above it could open the way towards 29,920 and then 29,940, the recent intraday peak.

On the downside, 29,860 is the nearest visible support. A decisive break below it could signal further selling pressure, though no lower support is confirmed on the chart.

Nasdaq Prediction: Will the Nasdaq Rise or Fall?

The Nasdaq’s next move will depend on whether buyers can reclaim the 29,880-29,900 zone or whether sellers push the index below 29,860. The US PPI report on 15 October is the next major catalyst.

A bullish scenario could develop if NASDAQ100ft breaks and holds above 29,880, which may bring 29,900 into focus, with a sustained breakout towards 29,920-29,940. A bearish scenario could emerge if the index fails to reclaim 29,880-29,900 and breaks below 29,860, potentially extending the short-term downtrend.

A softer-than-expected PPI could ease inflation concerns, lower yields and support technology and AI stocks. Another inflation surprise could reinforce expectations of further Fed rate increases and keep yields, and pressure on equities, elevated.

To read more about Nasdaq and its key trading levels, read the full article here.