• The Nasdaq Composite fell 1.0% Thursday, extending a week-long decline, as megacap tech stocks led the selloff amid renewed growth fears.
  • Weakness was broad-based in technology and semiconductor names, while energy and financials managed modest gains, highlighting a defensive rotation.
  • Investors are parsing mixed economic data and Fed signals, with attention on upcoming CPI and jobs reports for near-term direction.

Tech-Led Slide Deepens

The Nasdaq Composite dropped 1.0% on Thursday, bringing its weekly loss to over 2%, as a broad tech selloff dragged down the broader market. The S&P 500 fell 0.6%, while the Dow Jones Industrial Average eked out a 0.1% gain, underscoring a divergence as investors rotated into more defensive sectors.

Megacap technology stocks took the hardest hit, with Apple and Microsoft each sliding more than 1.5%, while chip stocks like Nvidia and AMD fell 2–3%. According to traders, the selling was driven by a combination of profit-taking and positioning ahead of next week's inflation data. "There's a sense that the easy gains from the AI rally are behind us, and now we need earnings to justify these valuations," one portfolio manager said.

Energy and financials bucked the trend, with the S&P 500 energy sector rising 0.8% as oil prices stabilized, and bank stocks edging higher on rising Treasury yields. The yield on the 10-year Treasury note climbed 4 basis points to 4.22%, reflecting shifting Fed expectations.

Macro Jitters Resurface

The selloff comes as investors digest a mixed bag of economic data. Initial jobless claims came in slightly below expectations, suggesting labor market resilience, but a disappointing manufacturing survey from the Philadelphia Fed pointed to weakening demand. "The data is sending conflicting signals," said a market strategist. "The Fed is stuck between still-high inflation and a slowing economy, which keeps uncertainty elevated."

Federal Reserve Governor Christopher Waller said in a speech Thursday that the central bank remains data-dependent, but reiterated that rate cuts are not imminent until inflation shows sustained progress. His remarks did little to soothe investor nerves, with rate-sensitive tech stocks bearing the brunt.

Outlook and Key Levels

Traders are now looking ahead to next week's consumer price index and retail sales data for clearer direction. The Nasdaq is testing its 50-day moving average near 16,800, a level that, if broken, could open the door to further downside. Options market data shows elevated put activity on the QQQ ETF, suggesting hedging against more losses.

"The market is in a wait-and-see mode," said a head of equity trading. "If CPI comes in hot, we could see a sharper selloff; if it's cool, tech might rebound quickly." For now, the trend favors risk-off until the macro picture clears.