Is Nasdaq Bearish? Looking at the US Stock Market

The Nasdaq Composite has been a rollercoaster lately, with investors wondering if it’s headed for a bearish turn. Last week, the tech-heavy index slipped 0.5%, underperforming compared to the S&P 500’s 0.2% dip and the Dow Jones Industrial Average’s near-flat performance. 

With uncertainties around Federal Reserve interest rates, geopolitical tensions involving Trump’s Iran decision, and sector-specific pressures like chip stocks, it’s no surprise folks are asking: Is Nasdaq turning bearish? Let’s break it down, looking at the key factors driving the market and what they mean for Nasdaq’s outlook.

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Why Is Nasdaq Wobbling?

The Nasdaq’s recent dip isn’t happening in a vacuum. Several forces are at play, from global politics to economic signals. Here’s a closer look at what’s shaking things up.

Geopolitical Jitters: Trump’s Iran Deadline

Trump’s two-week deadline to decide on U.S. involvement in the Israel-Iran conflict has markets on edge. 

Announced last Thursday, this move adds a layer of uncertainty that’s particularly tough on riskier assets like tech stocks, which dominate the Nasdaq. 

Iran’s rejection of diplomatic talks on Friday didn’t help, and reports of U.S. airstrikes on Iranian nuclear sites over the weekend sent oil prices soaring, further spooking investors. Higher oil prices could fuel inflation, which is bad news for growth stocks that thrive in low-rate environments.

Fed Rate Uncertainty: To Cut or Not to Cut?

The Federal Reserve’s latest moves, or lack thereof, are another big factor. 

The Fed held interest rates steady at 4.25%–4.50% last week, with Chair Jerome Powell signaling no rush to cut rates due to persistent inflation risks, partly tied to Trump’s tariff policies. 

High interest rates hurt tech stocks the most, as they rely on borrowing to fuel growth. The Nasdaq, packed with names like Nvidia and Apple, feels this pain acutely. 

Powell’s cautious tone, combined with a “stagflationary tilt” in the Fed’s projections (lower growth, higher inflation), keeps investors wary. If rates stay elevated, Nasdaq could face more downward pressure.

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Chip Stocks Under Pressure

Tech stocks, especially semiconductors, took a hit last week. A Wall Street Journal report suggested the U.S. might revoke waivers allowing global chipmakers to access American tech in China, sending Nvidia down 1.1% on Friday. 

Other chip stocks like Enphase Energy and SolarEdge also slumped after the Senate tweaked Trump’s tax-cut bill, phasing out solar tax credits by 2028. 

These sector-specific woes dragged the Nasdaq lower, as semiconductors are a key pillar of the index.

Is the Nasdaq Technically Bearish?

Beyond the headlines, what do the charts say? Technical analysts are mixed on Nasdaq’s outlook.

Technical Indicators

Some pointers said bearish signals. The Nasdaq 100 hit a tipping point in a rising wedge pattern at a resistance level of 22,000, with negative divergences in RSI and MACD indicators suggesting weakness ahead. 

A “doji” candle and sideways movement also hint at indecision, with resistance at 20,204 and support at 18,472.

However, others argue Nasdaq’s technicals are holding up better than peers. Despite a “sell” signal on the MACD, momentum remains strong, and only 28% of Nasdaq components are above their 200-day moving averages, suggesting the index isn’t overstretched.

Sentiment and Volatility

Investor sentiment is souring. The AAII Investor Sentiment Survey shows bearishness spiked to 41.4% last week, up from 33.6%, reflecting growing caution. 

The VIX Index, a measure of market fear, hovered near 22, indicating elevated volatility. While the S&P 500 is flirting with the 6,000 mark, Nasdaq’s consolidation phase could deepen if these sentiment trends persist.

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What’s Keeping Nasdaq Afloat?

Despite the gloom, there are reasons Nasdaq hasn’t tanked yet. Let’s look at the brighter side.

Economic Resilience

Some data points to a “soft landing” scenario, where inflation cools without a recession. 

Bank of America’s June Global Fund Manager Survey found 66% of investors believe in this outcome, boosting confidence. Monday’s rally, driven by hopes of easing Iran-Israel tensions, showed Nasdaq can bounce back when geopolitics cool off.

Policy Tailwinds

The Senate’s passage of the GENIUS Act, creating a federal framework for stablecoins, sparked a 30% surge in related stocks on Wednesday, lifting market mood. 

Dovish Fed comments, like Waller’s, also keep hope alive for rate cuts, which would be a boon for Nasdaq’s growth stocks.

Corporate Strength

Not all tech is struggling. Apple’s push to manufacture iPhone equipment in India signals long-term growth, while Oracle’s 12% surge after strong earnings cushioned Nasdaq’s losses earlier this month. These bright spots show the index still has firepower.

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Risks to Watch

So, what could tip Nasdaq into bearish territory? Here are the big ones:

• Middle East Escalation: A U.S. strike on Iran or a Strait of Hormuz closure could send oil prices skyrocketing, hammering stocks.

• Sticky Inflation: If Trump’s tariffs drive prices higher, the Fed might delay rate cuts, squeezing tech valuations.

• Economic Slowdown: Weak retail sales (down 0.9% in May), housing starts (down 9.8%), and jobless claims near eight-month highs signal cooling activity, which could dent corporate earnings.

• Trade Tensions: Trump’s hints at 55% China tariffs and uncertainty around the London trade talks could spook markets further.

Conclusion

The Nasdaq hovers near bearish territory, pressured by Trump’s Iran decision and Fed rate uncertainty. 

Sentiment is shaky, with the VIX at 22 and bearishness at 41.4% per AAII data. Strong earnings from Oracle and soft-landing hopes offer some support, but volatility persists.

Stay nimble as an investor. Diversify into value stocks or gold (up 2.95% to $3,379.60) to manage risks. A de-escalation in the Middle East or a Fed rate cut hint could lift Nasdaq, but rising oil prices or high rates may trigger a sell-off. Watch Trump’s Iran moves and Powell’s comments closely.

FAQ

Q1: Is the Nasdaq technically bearish right now?

A1: Not yet, but it's close. RSI and MACD show weakness, and the index is testing support zones. If 18,472 breaks, bearish confirmation gets real.

Q2: How are Fed rate decisions impacting Nasdaq?

A2: High rates = bad for tech. With no rate cuts in sight, borrowing stays costly, hitting growth stocks like Nvidia and Apple hard.

Q3: What’s the biggest risk for Nasdaq short-term?

A3: A U.S.–Iran escalation. One missile strike or oil price surge could trigger a Nasdaq sell-off. Watch Trump’s next move closely.

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