Nasdaq Composite edges higher amid tax relief and upcoming jobs data
Nasdaq starts Q3 with caution after record-breaking June
The Nasdaq Composite Index entered the third quarter of 2025 on a cautious note after a strong finish to June.
The index had closed the second quarter at an all-time high of $20,420, driven by a robust six-day winning streak that highlighted the strong appetite for tech and growth stocks. However, the start of July saw a shift in sentiment as traders moved to secure profits after the impressive run.
Highlights
-Nasdaq began Q3 below record high as traders booked profits
-Senate approval of Trump’s tax bill lifts early sentiment ahead of key labor data
-$20,100 holds as the next downside target if bearish pressure resumes
On July 1, the index dropped sharply by 266 points to touch an intraday low of $20,100, forming a notable double bottom pattern during the session. This quick retreat signalled that investors were ready to lock in gains at record levels. Despite the sell-off, the Nasdaq managed to recover part of the losses and finished the day at $20,200. This closing level is significant since it aligns with the previous all-time high reached in December last year, suggesting a strategic effort to maintain the index above a psychologically important support zone.
NASDAQ price dynamics (May- July 2025). Source: TradingView
The market narrative took another turn on July 2 as the Senate narrowly approved President Donald Trump's key tax bill. In pre-market trading, the Nasdaq Composite edged higher by 0.1%, reflecting little optimism among investors. The tax bill approval could stimulate corporate earnings and support further investment flows into equities. However, market participants remained attentive to external factors such as global trade developments and upcoming labor data, which could influence short-term price direction.
Nasdaq composite faces potential drag from weak labor data prints
Attention now turns to the ADP Non-Farm Employment Change report. Forecasts suggest an increase of 99,000 jobs, compared to a previous reading of 37,000. Stronger-than-expected job creation would likely support consumer spending and bolster economic momentum, providing a lift to the Nasdaq and other major indices. Conversely, a disappointing figure could dampen investor enthusiasm and prompt further profit-taking.
From a technical perspective, the $20,200 level has emerged as a near-term support. If the index holds above this level, it could open the door for renewed upward momentum and another attempt to revisit the recent high at $20,420. However, a break below $20,200 could shift focus toward the double bottom area near $20,100, which now serves as the next potential sellside target.
Investors are balancing the positive impact of fiscal policy support against profit-taking pressures and upcoming labor data. How the index reacts to these factors around the key support at $20,200 will set the tone for its trajectory in the coming sessions.
Traders bought aggressively after the tariff pause, which lifted Nasdaq 33% from April to June. RSI entered the overbought zone, suggesting potential for a pullback in early July.
