Nasdaq momentum cools at record high as volume dips ahead of major tech earnings

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Nasdaq momentum cools at record high

Highlights

- Nasdaq surges 2% to 26,000 after U.S.–China tariff framework sparks investor optimism.

- Seven stocks lift Nasdaq 4% in three days, reinforcing bullish market sentiment.

- Fed meeting and major tech earnings expected to shape Nasdaq’s near-term market direction.

Monday’s rally represented the third consecutive day of gains for the Nasdaq, bringing its three-day rise to about 4%. The move was driven by renewed confidence in the Federal Reserve’s ability to guide markets toward a looser monetary stance and by the resilience of the so-called Magnificent Seven stocks. Investors appear increasingly convinced that large-cap technology names will lead another leg higher for the index.

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

Technically, the Nasdaq’s RSI continues to signal bullish momentum while staying below the overbought level. However, the past three sessions of higher closes have been accompanied by declining daily trading volume, suggesting that investors are becoming selective ahead of a critical earnings stretch. This divergence between rising prices and lighter volume points to a degree of restraint, as market participants await confirmation from earnings data to justify current valuations.

Magnificent Seven earnings to dictate whether Nasdaq rally sustains

The upcoming earnings reports from Alphabet, Amazon, Apple, Meta Platforms, and Microsoft, five of the Magnificent Seven, hold particular importance. These companies represent a substantial portion of the Nasdaq’s market capitalisation, meaning their performance could determine whether the index extends its rally or pauses for consolidation. So far, the third-quarter earnings season has been positive, as most major corporations have surpassed Wall Street forecasts. This has helped sustain buying interest across the tech sector and lifted sentiment around the broader equity market.As of Tuesday, October 28, Nasdaq futures traded flat near 26,000 during the premarket session. Investors are turning their attention to the Federal Reserve’s two-day meeting beginning today, where policymakers are widely expected to announce the second interest rate cut of the year. Traders are pricing in a quarter-point reduction and speculate that another cut could follow in December.

The meeting coincides with a temporary U.S. government data blackout due to the ongoing federal shutdown, which adds uncertainty to the macroeconomic outlook. For now, the Nasdaq’s short-term trend remains positive, supported by optimism around trade progress and strong corporate earnings, though lighter volume signals that investors are holding back from aggressive positioning ahead of key policy and earnings announcements later this week.

Recently, we discussed Nasdaq futures rising 1.33% premarket as trade optimism sparked renewed buying momentum. RSI at 66 had signalled more upside potential while traders awaited Big Tech earnings reports.

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