Nasdaq Composite drops from 5-week high as yields rise and tech stocks retreat

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Nasdaq outlook tied to today’s jobs data

Highlights

Nasdaq reversed from 23,700 as tech stocks and semiconductors dragged the index lower
Nasdaq futures fell 100 points in Tuesday's premarket session before ADP and JOLTS labor market data releases
Semiconductor, streaming, and EV stocks trigger broad tech weakness across the Nasdaq session

The selloff was not isolated. Other major U.S. equity indices also dropped on Monday, while Treasury yields rose. The 10-year yield jumped in reaction to the strong earthquake off the coast of Japan, adding pressure on equities before U.S. markets opened. Elevated yields generally reduce the appeal of risk assets like tech stocks, and that was evident in the Nasdaq breadth data, where declining stocks outpaced advancers by a ratio of 1.28 to 1.

Nasdaq price dynamic (Oct - Dec 2025). Source: Tradingview

Sector-specific weakness added weight to the decline. Communication services suffered from heavy selling, led by a 3.4% drop in Netflix, a more than 2% loss in Alphabet, and a pullback in Meta. Semiconductor stocks also fell sharply, as Marvell Technology lost 7%. Tesla dropped 3% after Morgan Stanley issued a negative outlook on the EV maker. This broad weakness across influential names contributed to the reversal and broke the intraday trend that had supported the Nasdaq Composite for more than three weeks.

Key labor reports today to shape rate cut bets and Nasdaq recovery chances

In Tuesday’s premarket session, Nasdaq futures have fallen another 0.4%, or 100 points. The break in trend structure has already started to materialize into a potential retracement, though macro factors may still influence the depth of the move. The Federal Reserve’s upcoming policy decision is expected to bring dovish guidance, which could support a rebound later this week.

Before that, however, traders will closely watch today’s labor data. The ADP Employment Change and JOLTS Job Openings reports could influence market expectations. If the data signals labor market weakness, expectations for rate cuts will firm, and that could spark bullish recovery flows into tech stocks. In that scenario, the Nasdaq could quickly bounce back toward 23,700.

If instead the data points to a strong labor market, the index may continue to consolidate within the 23,400 to 23,700 range. Near-term support lies around 23,400, which aligns with the 50 EMA on the one-hour chart and could act as the next technical defense against deeper losses.

In recent analysis, we discussed how the Nasdaq Composite extended its rally toward 23,800 as Fed cut bets strengthened. We noted how weaker inflation data reinforced dovish expectations and supported further upside momentum.

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