Tech Rally Stalls as Nvidia’s Stellar Results Trigger Selloff

A surprising wave of selling swept through the technology sector despite Nvidia reporting blockbuster earnings, creating a paradoxical trading session. Instead of propelling markets to new heights, the chipmaker's impressive performance prompted investors to cash in profits and shift capital toward defensive assets. This pullback raises a critical question for market participants: was this a necessary and overdue market correction, or does it signal the beginning of a more profound downturn, exacerbated by renewed concerns over the interest rate trajectory?

The sell-off was not solely driven by profit-taking in tech stocks. Lingering uncertainty regarding the Federal Reserve's monetary policy continues to unsettle markets. Recent hesitancy from Fed officials to commit to an aggressive path of interest rate cuts has kept bond yields stubbornly elevated. This environment is particularly toxic for high-growth, richly valued equities, which see their future cash flows discounted more heavily when rates remain high.

This dynamic triggered a significant sector rotation. As major technology giants shed value, capital flowed into more defensive areas of the market. Companies in the healthcare sector, such as Regeneron Pharmaceuticals and GE HealthCare, managed to buck the downward trend and post gains. This clear shift in capital allocation underscores a marked decrease in risk appetite among institutional investors.

Should investors sell immediately? Or is it worth buying NASDAQ 100?

The "Sell the News" Phenomenon Explained

The market's reaction is a textbook example of the "Sell the News" strategy. Even though Nvidia's quarterly figures dramatically surpassed expectations, they proved insufficient to justify the sector's extreme valuations in the eyes of short-term traders. The outcome was a broad-based selling wave that hit semiconductor stocks with particular force, dragging the Nasdaq 100 sharply into negative territory. The index concluded Thursday's session at 24,054.38 points, inflicting notable technical damage to its chart.

All Eyes on Friday's Economic Data

The recent slump has clouded the technical outlook for the Nasdaq 100, with key support levels being breached. Rising volatility often signals further turbulence ahead. Trader focus is now pivoting to the upcoming Purchasing Managers' Index (PMI) releases. In the current jittery climate, strong economic data could paradoxically have a negative impact by reinforcing the "higher for longer" interest rate narrative. Conversely, a weak report might stoke fears of an impending recession. Friday's trading will be decisive in determining whether the index can establish a solid footing or if the downward pressure is set to continue.