Wall Street swung from a hawkish Fed dissent that sent the Dow plunging over 1,100 points into a Thursday rebound powered by Microsoft's earnings. The Nasdaq 100 briefly touched correction territory before snapping a six-day losing streak, and now presses against a trendline-EMA confluence that has repeatedly capped rallies over the past several sessions.
Wall Street lived through one of its wildest 48-hour stretches of the year. The Fed held rates steady at 3.50%-3.75% on Wednesday, but three FOMC members broke ranks to demand a hike. The unusually hawkish dissent sent the Dow plunging over 1,100 points, its worst session since April 2025.
Treasury yields spiked in the same session, with the 30-year touching levels unseen since 2007, as renewed US-Iran strikes pushed oil higher and reignited inflation fears. The Nasdaq 100 briefly slid into correction territory, down 11% from its June record high.
Microsoft earnings snap the losing streak
Then came the reversal. Thursday's earnings from Microsoft, whose Azure cloud business surged, combined with a rebound in beaten-down semiconductor stocks to power the Nasdaq Composite to a 2.8% gain, snapping a six-day losing streak. The whiplash captures the market's core dilemma: a Fed chair in Kevin Warsh determined to prove his inflation-fighting credentials, a Middle East conflict that refuses to fade, and a tech sector whose AI-driven earnings power may be the only force strong enough to override both.
Nasdaq 100 tests a trendline it hasn't broken
The Nasdaq 100 is now testing the descending trendline that has guided its decline from late June's highs. Price is also pressing against the 100-period EMA near 28,620, a confluence that has repeatedly capped rallies over the past several sessions. Adding weight to the setup, the RSI is showing a bullish divergence, printing higher lows even as price carved a fresh low in late July.
Bullish and bearish scenarios
Should buyers break above both the trendline and the EMA, the divergence gains real technical credibility, opening the path toward the 28,800-29,000 resistance zone. Beyond that lies a retest of June's 30,750 highs. A rejection at this confluence instead sends price back toward the 27,720 area, the 0.382 Fibonacci retracement of the March-June rally. A deeper break would expose the 0.5 and 0.618 retracements near 26,789 and 25,850, levels that previously supported the spring advance.
Price is coiled beneath a trendline it has yet to conquer, with the RSI quietly hinting at renewed strength underneath.
Source: ActionForex
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