The Nasdaq is positioned for a potential breakout as US financial conditions have eased significantly in recent days, creating favorable conditions for the technology-heavy index. According to Investing.com analysis, Treasury yields have pulled back across the curve, the US dollar has weakened and VXN, the Nasdaq equivalent of the S&P 500 volatility index, has reversed from earlier week levels. The index is currently sitting just beneath a key technical resistance zone heading into Friday's August payrolls report, with a sustained break above the confluence of the 23.6% Fibonacci retracement and downtrend resistance around 29,500 potentially allowing for a retest of August highs. The technical setup shows RSI (14) pushing higher away from the neutral 50 level and MACD flipping positive, indicating building upside momentum that favors long positions over shorts.
US stock futures traded mixed on Thursday, September 3, following gains in major indices from the previous session. According to reports from Live Mint and TradingKey, S&P 500 futures rose 0.06%, Dow futures gained 0.22%, while Nasdaq 100 futures fell 0.08% in pre-market trading. In the previous session, all three major indices closed higher with gains of up over 0.50% each. The mixed performance comes as investors continue to assess market conditions amid ongoing economic uncertainties, with bond yields surging above 4.75% as part of a broader global bond selloff that has raised concerns about persistent inflation and energy shocks linked to the Iran conflict.
US August ADP employment data came in significantly below expectations, with employment increasing by just 38,000 jobs, well below the expected 47,000 and marking the lowest level since January. As reported by TradingKey, this weak employment data has shifted market focus further toward Friday's non-farm payrolls report to assess the Federal Reserve's next monetary policy path. The disappointing employment figures drove US Treasury yields down, providing support for precious metals prices and contributing to the mixed futures performance. The weak employment data has intensified concerns about economic growth and deteriorating growth expectations, particularly affecting technology stocks that had been benefiting from AI demand.
Investors welcomed encouraging signals about artificial intelligence demand from major technology companies, including Dell Technologies and Palo Alto Networks. As reported by Live Mint, the AI boom has remained one of the key drivers behind the S&P 500's gains this year. This optimism in the technology sector continues to provide support for broader market indices, with the renewed buying in technology and chip stocks contributing to the previous session's gains. The broader S&P software index gained roughly 14% in August, its strongest August in data going back to 1990. However, the recent bond market selloff has created headwinds for technology stocks, with Nasdaq's fate hinging on US CPI and Middle East conflict as growth expectations deteriorate.
Major AI infrastructure deals continue to reshape the technology landscape, with Nvidia acquiring Hugging Face for $13 billion in a strategic move to strengthen its AI capabilities. According to Yahoo Finance, Hut 8 is developing a data center in Nueces County, Texas, that will be leased by Nvidia as part of a new $35 billion cloud-computing deal between Anthropic and Nvidia-backed Lambda. Hut 8 shares rose as much as 4% in premarket trading on Tuesday, reflecting the growing demand for AI infrastructure. The company has 11 publicly disclosed projects and many more behind-the-meter opportunities in its pipeline.
The bond market has experienced significant selling pressure, with the yield on the US 10-year Treasury rising above 4.75% as part of a broader global bond selloff. According to Live Mint and TradingKey, the retreat followed concerns about persistent inflation, energy shocks linked to the Iran conflict and rising US government debt. However, recent data shows over the past week, Treasury yields have pulled back across the curve, the US dollar has weakened and VXN has reversed from earlier week levels. This short-term easing in financial conditions has coincided with a Nasdaq rebound into a resistance zone, creating the current setup where the index is positioned for potential breakout if Friday's payrolls report extends the easing trends.
