US stocks closed lower Wednesday, with AI and semiconductor shares taking a particularly hard hit. The Nasdaq Composite recorded its worst day since July 23, while the Nasdaq 100 and S&P 500 posted their largest declines since July 29.
The hotter-than-expected CPI report provided an uncomfortable backdrop. Headline inflation rose 3.7% year over year versus 3.6% expected, keeping inflation and the Fed’s next move firmly in focus. Treasury yields moved sharply higher following the release, adding pressure on growth-stock valuations, but did move back lower off their highs as stocks retreated and they found a safe haven bid. The 2 year is still 1.9 basis points higher at 4.812%, but the 10 year is trading down -1.9 basis points at 5.198%. The US 2 year yield reached a high of 4.95% while the US 10 year yield reached a high of 5.329%.
The Dow held up relatively well, falling just 0.09%. However, the selling extended beyond technology, with the Russell 2000 losing nearly 2%. Traders now turn to Thursday’s September PPI report at 8:30 AM ET for the next inflation test. The combination of the CPI and the PPI will give traders and Fed officials a good read on the overall core PCE data.
The closing numbers
Dow Industrial Average: Down 48.98 points, or 0.09%, at 51,626.17.
S&P 500: Down 86.51 points, or 1.11%, at 7,718.94.
Nasdaq Composite: Down 511.51 points, or 1.88%, at 26,692.87.
Russell 2000: Down 53.84 points, or 1.93%, at 2,729.53.
Nasdaq 100: Down 618.66 points, or 2.02%, at 29,950.82.
AI and chip stocks take the brunt
There were few places to hide within the AI, semiconductor and related infrastructure names. A number of shares fell more than 5%, with some suffering double-digit percentage declines.
Among the hardest hit:
CoreWeave: −15.46%.
Nebius: −10.08%.
Credo Technology: −9.62%.
Lumentum: −9.28%.
Coherent: −9.19%.
Bloom Energy: −9.15%.
Marvell Technology: −8.72%.
Astera Labs: −7.72%.
Arm Holdings: −6.81%.
GE Vernova: −6.20%.
SK Hynix: −6.06%.
Monolithic Power Systems: −5.79%.
AMD: −5.73%.
SanDisk: −5.33%.
Even some of the better performers in the group suffered meaningful losses. Texas Instruments fell 2.50%, KLA declined 2.82%, and Broadcom lost 3.10%.
That tells you something about the selling pressure. When a decline of 2.5%–3% puts a stock among the better performers, sellers have a firm grip on the group.
Apple stands alone among the Magnificent Seven
Apple managed to buck the selling, but the other six names finished lower:
Apple: +0.50%.
Alphabet: −1.74%.
Amazon: −1.74%.
Microsoft: −1.80%.
Tesla: −2.15%.
Nvidia: −3.16%.
Meta: −3.27%.
Nasdaq 100: Sellers take more control below the 200-hour moving average
The Nasdaq 100 closed at 29,950.82, below its 200-hour moving average near 30,145. That break shifts the shorter-term technical bias further toward the sellers.
The burden is now on the buyers to get the price back above that moving average—and stay above it. Until they can do that, rebounds remain vulnerable to sellers leaning against the level.
On the downside, the next major target is the 100-day moving average near 29,618.83. The rising lower channel trendline is also nearby, making that area an important battleground.
If buyers defend that area, they can try to stabilize the decline. A sustained break below both the moving average and trendline would increase the bearish bias, with the 28,822.67–28,953.26 swing area becoming a broader downside target.
Conversely, reclaiming 30,145 would ease some immediate pressure. Buyers would then need to work back through the resistance area around 30,634.67–30,762.20, which includes the 100-hour moving average near 30,665.
Sellers have made their move. Buyers need to show they can take something back.
The trading lesson: Let the levels define the risk
A sharp decline does not automatically make a stock or index a bargain. For a beginner trader, the more useful question is: What would tell me the selling pressure is easing?
For the Nasdaq 100, recovering and holding above the broken 200-hour moving average would be an initial improvement. Finding buyers near the 100-day moving average would be another development to watch.
Support gives traders a place to measure risk. The price still has to hold it.
This article was written by Greg Michalowski at investinglive.com.
