A confluence of negative catalysts sparked a broad sell-off in technology shares at the start of the week, driving the Nasdaq 100 sharply lower. The index closed down 1.26% at 24,698.20 points. Market anxiety was palpable, with the VIX volatility index jumping to 20.60, decisively breaching the closely watched 20-level and signaling a significant increase in demand for portfolio protection.
AI Innovation Sparks Sector-Specific Sell-Off
The primary pressure stemmed from growing investor concern that emerging artificial intelligence tools could disrupt established software and cybersecurity business models. This fear was ignited by the Friday unveiling of Anthropic’s “Claude Code Security,” an AI solution capable of automatically scanning code for vulnerabilities. The announcement immediately raised questions about potential medium-term cannibalization within the traditional cybersecurity software market.
The reaction was severe for several major players. IBM shares plummeted 13.15% to $223.35, marking their worst trading day since October 2000. The decline followed a separate Anthropic announcement suggesting “Claude Code” could also automate the modernization of COBOL, a legacy programming language central to a portion of IBM’s services business.
The selling pressure extended across the security and software observability landscape. Datadog fell 11.28%, Zscaler dropped 10.34%, and CrowdStrike declined 9.85%, adding to its 7.95% loss from the previous Friday. AppLovin shares slid 9.09%.
Trade Policy Uncertainty Adds to Downward Momentum
Compounding the sector-specific worries, trade policy re-emerged as a market headwind. Over the weekend, former President Trump responded to a Supreme Court ruling that overturned his previous reciprocal tariff authority by proposing a blanket 15% import tariff. While U.S. Trade Representative Jamieson Greer attempted to calm nerves by highlighting existing bilateral agreements, pushback from Europe intensified the uncertainty. The chair of the European Parliament’s trade committee suggested pausing the EU-U.S. trade agreement and described the situation as “pure tariff chaos.”
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This flight from risk assets prompted a modest safety bid. The yield on the 10-year U.S. Treasury note edged lower to 4.08%. Gold futures surged 2.96% to $5,231.44 per ounce, and silver futures rallied 5.58%. The U.S. Dollar Index softened by 0.20%.
Technical Picture Weakens
From a technical perspective, the Nasdaq 100’s closing level places it firmly below its key moving averages. The index finished approximately 280 points below its 50-day average, 608 points under its 100-day average, and roughly 731 points beneath its 200-day average. The 14-day Relative Strength Index (RSI) hovered around 39, approaching oversold territory but not yet at extreme levels. Indicators like the MACD and ADX continued to point to an established downtrend.
Technical analysts identified immediate support at 24,519. A break below that level would bring the prior week’s low of 24,387 into view, followed by the psychological 24,000 mark. On the upside, the zone between 24,920 and 25,000 is seen as a significant resistance area.
Weak market breadth confirmed the negative tone. On the Nasdaq exchange, declining issues outnumbered advancers by a ratio of 2.29 to 1. Furthermore, only 67 stocks hit new 52-week highs compared to 264 setting new lows. Total U.S. trading volume of 18.39 billion shares came in below the 20-day average of 20.62 billion.
Key Events on the Horizon
Market participants are now looking ahead to two imminent events. Anthropic has scheduled an enterprise briefing to detail new product developments, which could either prolong the nervousness in the security sector or provide clarifying details that soothe markets. Additionally, Nvidia’s upcoming earnings report on Wednesday looms as the next major potential catalyst for the sector. In after-hours trading, futures for the index were little changed. In the near term, the technical levels of 24,519 (support) and 25,000 (resistance) are likely to remain critical.
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