A fifth consecutive day of losses for the Nasdaq 100 is testing the resolve of technology investors in early 2026. As broader equity indices demonstrate resilience, the tech-heavy sector finds itself on the defensive. The dual pressures of climbing bond yields and disappointing updates from bellwether companies like Tesla are fueling market anxiety. The central question for traders is whether this represents a routine market correction or the early stages of a more significant sector rotation.
Internal Divergence Within the Sector
Beneath the index’s downward move, a notable split emerged in Friday’s trading session. While traditional software giants, including Microsoft and Meta, faced pronounced selling pressure—highlighting a shift away from highly-valued names—the semiconductor segment displayed unexpected strength.
The standout performer was Baidu. Its shares surged by double digits, propelled by plans for an initial public offering of its AI chip unit, Kunlunxin, in Hong Kong. U.S. chipmakers like Micron and Intel also managed to buck the broader negative trend, closing the day in positive territory. This selective performance suggests capital is being reallocated within the technology space rather than abandoned wholesale.
Bond Yields and Tesla Weigh on Sentiment
Friday’s session was characterized by a sharp reversal in market mood. After an optimistic start that saw the index test higher levels, sellers quickly used the uptick as an opportunity to exit positions. The primary catalyst for the shift was a rise in the yield on the 10-year U.S. Treasury note, which climbed to 4.19%. Higher interest rates diminish the relative appeal of growth-oriented tech stocks compared to safer government bonds.
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Adding to the downward pressure was Tesla. The electric vehicle maker’s fourth-quarter delivery figures fell notably short of analyst forecasts. As a major component of the index, Tesla’s share price decline dragged the entire Nasdaq 100 lower. The index concluded trading at 25,242.41 points, marking a daily loss of 0.19%.
Technical Indicators Flash Caution
The chart pattern, however, is sending warning signals. Friday’s conspicuously high trading volume implies institutional investors may be reducing their exposure. With the fifth straight day of declines, the index is approaching critical support zones around the 25,000-point mark. A decisive break below this level could pave the way for a test of the 50-day moving average, which currently sits near 25,266 points and has already been slightly breached.
As the new trading week begins, focus will remain fixed on the bond market. A stabilization in yields is likely a prerequisite for bulls to regain enough momentum to reverse the current trend. Traders will monitor the lows established on Friday closely; a failure to hold these levels risks accelerating the downward move unless fresh buying interest emerges to support the market.
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