Nasdaq Composite extends losses as AI stocks drag index to three-week low

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Nasdaq slides amid AI weakness

Highlights

Nasdaq weakness reflects bearish technical shifts as AI stock rotation drags momentum below neutral levels.
EMA crossover near 23300 limits upside while price consolidates ahead of delayed US data releases.
Jobs data outcome may determine whether Nasdaq holds 23000 or extends losses into new lows.

The drop on Monday completed a second leg down from an earlier 8-day consolidation zone, confirming a bearish distribution phase. AI stocks were the primary weight on the index, as continued rotation out of the sector pressured major names. Broadcom lost over 5% while Oracle shed 2%, reinforcing a clear sector-based drag. These losses dragged the Nasdaq’s daily RSI to 46, the first time it has slipped into bearish territory in December. The index’s month-to-date return has now flipped negative at 1.3%.

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

Technically, the near-term outlook has deteriorated. The 20 EMA on the 1-hour chart crossed below the 100 EMA at the 23,300 mark, a level that has now become a resistance pivot for any bullish attempts. Since then, the 20 EMA has drifted lower and currently sits at 23,240, further pressuring any recovery efforts. As of Tuesday’s premarket, price action has stayed within Monday’s trading range, suggesting a short-term consolidation phase while traders await fresh directional cues.

Nasdaq outlook hinges on Non-Farm Employment print and rate cut expectations

Those cues are expected from a batch of key U.S. economic data set for release later in the day. These include Core Retail Sales, Non-Farm Employment Change, and Flash Manufacturing PMI, all delayed due to the government shutdown. These data points are crucial for refining expectations around the Federal Reserve’s monetary policy direction. The Non-Farm Employment report in particular could offer clarity on whether a softening labor market is materialising.

A weaker-than-expected NFP print below the 51K forecast would reinforce the idea that the U.S. economy is cooling, which in turn could strengthen the case for Fed rate cuts in early 2026. That outcome may support growth stocks and allow the Nasdaq to hold above the 23,000 threshold. However, if job creation proves resilient, bond yields may firm again and place additional pressure on tech stocks, potentially dragging the index into new lows.

In this context, short-term technicals and broader macroeconomic cues are closely aligned. A break below 23,000 would not just mark fresh multi-week lows, but also signal a deeper reassessment of growth valuations ahead of the next Fed meeting. Meanwhile, any upward surprise in the labor or spending data could further delay rate cut expectations, reinforcing the bearish bias in the Nasdaq Composite’s current structure.

In recent analysis, we discussed how Nasdaq futures rebounded 0.65% after Friday’s drop in AI stocks. The index closed 1.7% lower as Broadcom and Oracle earnings losses deepened tech sector pressure.

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