Nasdaq Composite rally fades as broader market trims gains ahead of labor data

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Wall Street trims gains ahead of labor data

Highlights

Nasdaq retreats after failing to hold breakout above 23,700 as resistance caps rally
Alphabet’s $3.89 trillion valuation boost lifts tech, but other sectors drag the index lower
Nasdaq 4h EMA zone near 23,350 offers support ahead of key labor data

Wednesday’s rally was largely driven by Alphabet’s sharp 3.8% surge, which played a key role in lifting the broader index. The tech giant’s rise helped Alphabet overtake Apple in market capitalization for the first time since January 2019. Alphabet reached a valuation of $3.89 trillion, while Apple slipped to $3.85 trillion. This shift reflected renewed investor preference for AI-linked tech stocks, as interest rotated back to growth names. However, the positive momentum in the Nasdaq was partly diluted by losses in other sectors such as utilities, materials, industrials, and banking stocks.

Nasdaq Composite price chart (Oct 2025 - Jan 2026). Source: Tradingview

The failure to close above 23,700 has once again placed that level as a ceiling for price. This resistance has capped every bullish attempt since November 2025, making Wednesday’s rejection another confirmation of its significance. Yet the broader trend remains constructive. The rebound that started from the 50-day EMA on January 2 continues to show strength and has pushed the daily and 4-hour RSI readings into bullish territory.

Nasdaq upside rests on weaker jobs print that may revive early rate cut bets

Volume levels have normalized following the holiday season lull. Wednesday’s session recorded daily volume in line with average historical levels, adding confirmation to the price breakout attempt. However, Thursday’s premarket pullback suggests traders are now adjusting positions ahead of key labor market data. The Labor Department’s Q3 unit labor costs and jobless claims data are due today, serving as early indicators before Friday’s nonfarm payroll report. Analysts expect only 60,000 jobs to have been added in December, along with a slight dip in the unemployment rate.

This soft labor market forecast may dampen investor sentiment temporarily but could also reinforce expectations that the Federal Reserve is nearing the end of its hiking cycle. Such expectations tend to favor tech stocks and the broader Nasdaq index, which is sensitive to interest rate outlooks. However, in the near term, uncertainty ahead of Friday's data may cap gains and encourage some profit-taking.

Labor data may push yields higher and drag Nasdaq toward 23,200

Technically, support levels are forming between 23,400 and 23,350, anchored by the 20 and 50 EMA on the 4-hour chart. These levels are likely to provide a cushion if selling pressure continues into the U.S. cash session. A firm bounce from these zones could re-establish upside momentum toward a retest and clear breakout of the 23700 level.

In terms of U.S. economic reports, if labor data comes in weaker than expected, it may strengthen hopes of early rate cuts, pushing the Nasdaq Composite toward the psychological 24,000 level. However, if today's and Friday’s data show labor resilience, yields may tick higher and pressure growth stocks. In such a scenario, the index could break below the 4-hour EMAs and retreat toward the 100 EMA support at 23,200.

In recent analysis, we discussed how the Nasdaq pulled back from 23,550 after profit-taking followed the chip-stock rally. Price held above the 20 EMA near 23,400 as investors watched ADP jobs data after a brief institutional exit.

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