Nasdaq Composite regains bullish tone as manufacturing data revives rate cut optimism

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Nasdaq Composite regains bullish tone

Highlights

Nasdaq Composite rises above $23,360 after 20 EMA support held firm during Monday’s pullback.

RSI and EMA alignment suggest further upside potential as traders price dovish policy stance.

AI debt surge above $120 billion sparks concern about the sustainability of growth valuations.

Monday's rebound came in response to a fresh contraction in U.S. manufacturing PMI data. That data print supported expectations for Federal Reserve rate cuts and helped reprice risk assets. Dovish shifts in macro policy expectations often lead to strength in tech stocks due to their sensitivity to discount rates. Yet despite this trigger, the Nasdaq failed to reclaim the day’s losses or turn the weekly chart positive. That failure kept bulls on the back foot and left Tuesday’s price action carrying significant directional weight.

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

Today’s follow-through in Nasdaq futures suggests that buyers are reclaiming the initiative. The index is close to breaking above Monday’s high, which would mark a minor bullish structure shift and potentially build the case for a broader recovery. Still, sector-specific concerns are rising again. The focus has returned to the AI trade, not just on valuations, but on capital structure. AI and data infrastructure companies have reportedly raised over US$120 billion in bond issuance over the last eight weeks. That pace is testing investor appetite and raising concerns about long-term funding capacity.

AI debt issuance above $120 billion raises questions over long-term funding strength

The pressure on bond markets reflects deeper discomfort about the sustainability of trillion-dollar investment narratives. As companies draw more from debt markets to support AI ambitions, cracks are starting to appear in broader credit demand. Market participants are questioning whether the returns from AI adoption can justify the capital being deployed. These doubts could weigh on valuation multiples and raise volatility across growth stocks, especially if funding costs begin to rise again or if policy easing gets delayed.

Still, the technical structure offers short-term support. A bullish crossover between the 50 and 100 EMA on the 1-hour chart occurred at 22,950, marking a golden crossover that often supports trend continuation. RSI readings on the hourly, daily, and weekly charts are all aligned in bullish territory. Crucially, no timeframe is yet overbought, which suggests that momentum is sustainable and room for further expansion remains intact across all three timeframes.

If the bullish tone in the futures session is confirmed during the cash market open, the Nasdaq Composite Index could extend toward 23,500 before the session closes. This would signal an effort to reclaim November’s losses and re-establish tech leadership going into the final stretch of the year. Traders will continue to weigh sector-specific risks against macro relief as the balance between rate expectations and credit pressures dictates momentum into year-end.

In recent analysis, we discussed how the Nasdaq Composite stalled after a five-day surge near 23,380. Investors eased AI valuation concerns and priced in December rate cuts, lifting tech sentiment.

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