Nasdaq 100 forecast: Stocks drop on Nvidia earnings and tariffs

US stocks fell shortly after the open. The tech sector will remain in focus following Nvidia’s earnings, with its shares falling 3.5% after being up around 1% in pre-market earlier. Nvidia delivered results on Wednesday that were solid but not spectacular. Investors, accustomed to blockbuster results, have so far responded with a rather muted reaction. Nvidia’s performance today will be key and could set the tone for the next few sessions in the sector. In fact, the technology sector and specifically chipmakers will remain at the centre of market volatility, with recent losses keeping investors on edge amid concerns about valuations and the latest US crackdown on China’s technological progress. Meanwhile, Trump ramped up his tariff threats, saying that Mexico, Canada and China tariffs will take effect on March 4. His post was enough to send major currencies like the EUR, CAD and CNH lower, further fuelling the risk-off tone. Trade war risks means the Nasdaq 100 forecast is subject to increased volatility.  The focus is now turning to Core PCE data on Friday, after another disappointing set of macro releases with pending home sales plunging 4.6% month-on-month and jobless claims rising 242K vs. 222K expected.

Nasdaq forecast: Nvidia’s earnings fail to excite 

There is no doubt that most of the attention was on Nvidia’s earnings and its share price performance. After being up more than 1% in pre-market, the stock tumbled around 4% and that caused the Nasdaq and other US indices to give up their earlier gains.

The lukewarm reception to Nvidia’s outlook comes at a precarious moment for the AI industry. Recent developments, such as Chinese start-up DeepSeek’s demonstration that chatbots can be developed at a fraction of the expected cost, have sparked concerns that the demand for Nvidia’s high-powered chips could diminish. 

Whether Nvidia’s mixed results will be enough to assuage fears about the shifting dynamics in the AI sector remains to be seen. However, judging by the tepid response in its share price, one might be forgiven for harbouring doubts. 

Watch how NVDA trades later and if it struggles to rebound then this could negative impact the Nasdaq 100 forecast. Today’s performance for this hugely important stock could have major implications for other US indices, too.

Tariffs to take effect March 4

Donald Trump’s contradictory statements on Wednesday regarding the implementation of tariffs left investors scratching their heads. Today, he was quite clear: tariffs for Canada, Mexico and China are going to take effect on March 4. Until today, the tariff situation was a bit of a muddle. On one hand, we had heard bold statements from Trump; while on the other, ongoing negotiations meant there was room for delays or extensions. But with days to go until March 4, investors are now more concerned that before that tariff will be introduced on 4^th March after all.

Core PCE coming up on Friday.

With Nvidia’s earnings now out of the way, attention shifts back to tariffs and the ongoing Ukraine peace talks. On the macroeconomic front, the next big release is the Fed’s preferred inflation measure—the core PCE price index— on Friday, which will come alongside a smattering of second-tier data releases.  On top of the weakness in economic data releases in the last couple of weeks, we have also seen evidence that long-term inflation expectations are creeping higher amid discussions of potential tariffs, stoking fears of stagflation. Last week’s UoM survey revealed a striking 30-year high in long-term inflation expectations, reaching 3.5%—a reflection of consumer sentiment on inflation over the next five years.  If the PCE data comes in ahead of the expected 2.6% reading, then that could trigger further volatility in the markets.

Technical Nasdaq 100 forecast: key levels to watch

Source: TradingView.com

Following the recent drop in tech names and, in particular, weakness in Nvidia stock, the Nasdaq 100 has eased lower. This has allowed it work off its short-term overbought conditions further, as it continues to trade inside a range it has been stuck inside since December. The loss of bullish momentum has so far not caused any major breakdowns of key support levels to scare away the bulls just yet. They continue to buy the dips, but their inability to create a new all-time high so far this year may be a sign of concern, requiring a correction of some sort to make the tech sector appealing again.

One key support area to watch on the Nasdaq is around 20760-20900, which roughly corresponds with a major high from July 2024 and prior support that has been established in more recent times. This area has been tested on several occasions in recent weeks and so far, the bulls have prevailed. In light of the recent struggles in the tech sector, though, you would feel that a potential breach of this area on a closing basis could see the onset of a potentially sharp correction, which could send the index tumbling to around its long-term 200-day moving average, of around 20280, and thereby below the January low of 20529.

However, if the abovementioned support continues to hold – as it may have been the case following this week’s retreat – then the bulls wouldn’t be too worried. A couple of short-term broken support levels need to be reclaimed though before the index starts looking bullish again, starting with the 21325 area, which is now the bears’ first line of defence. Above this, the 21-day exponential average comes into focus at around 21580, then the next target is at 21865/80, the low from last Thursday and base of the recent breakdown.

-- Written by Fawad Razaqzada, Market Analyst

Follow Fawad on Twitter @Trader_F_R

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