The NASDAQ’s three-day streak came quickly to an end during Thursday’s Asian session. The NASDAQ is not the only index trading lower, but is experiencing the largest fall. European indices and the Dow Jones are edging slightly higher while most tech-linked indices are falling.

The downward price movement is a result of the Federal Reserve press conference, the FOMC vote split, and poor Alphabet earnings. At the same time, investors continue to feel the pressure from high inflation, oil prices, and bond yields.

Alphabet Earnings - Alphabet Stocks Down 10% After Missing Earnings Expectations

The stock has been trading 1.70% lower over the past week and fell a further 9.97% after trading hours. Alphabet stocks are now one of the few AI-stocks trading in negative territory for 2026.

Alphabet’s earnings report had both positive and negative figures, but investors were quick to sell due to fears over the AI trend. For investors to maintain confidence in AI-related stocks, companies must exceed expectations across all key performance metrics.

The positives from the earnings report were that the company’s overall revenue rose 25% year on year and beat market expectations. Google Cloud revenue also rose above previous predictions. However, the key bearish drivers came from earnings and AI spending.

Net income declined approximately 25% to $26.2 billion, partly due to an $8.7 billion investment loss. Google advertising revenue reached $82 billion but missed analyst forecasts by slightly more than $1 billion, raising concerns about Search monetisation. Lastly, AI capital expenditure reached $51.4 billion during the quarter, with management expecting further increases in 2027.

Alphabet stocks are the third most influential component for the NASDAQ with Nvidia and Apple ranking first and second. The decline is applying significant pressure on the index and sentiment towards AI overall. Microsoft stock is positively reacting to its earnings report, but the increase is moderate and is not outweighing the importance of the Alphabet’s earnings.

Microsoft Earnings - Microsoft Stocks Rise 2.90%

The company saw stronger earnings, revenue, and positive cloud growth, easing investor concerns about the profitability of AI. Unlike Alphabet, Microsoft’s shares rallied after hours, supported by strong Azure demand and impressive cash flow. However, gains were minimal to moderate as investors remain concerned about AI in general and due to the Fed’s forward guidance.

Revenue reached $92.3 billion, while adjusted EPS rose 18% to $4.89, demonstrating resilient profitability. Furthermore, Azure revenue increased 48% to $33.17 billion, exceeding forecasts as demand for AI and cloud infrastructure remained strong. Microsoft forecasts Azure revenue growth of 49%-50% next quarter, alongside stronger-than-expected overall sales.

The only concern for investors is AI spending. Capital expenditure reached $45.2 billion during the quarter and is expected to exceed $50 billion next quarter. Nonetheless, Microsoft stock is trading with a 15.00% gain in 2026 so far.

Federal Reserve Rate Guidance

The Federal Reserve kept interest rates unchanged, but adopted a hawkish outlook and a positive economic assessment. Warsh highlighted resilient consumer spending, robust capital investment, and strong productivity, suggesting the economy can withstand restrictive monetary policy.

Out of the 12 members of the Federal Open Market Committee, 10 members voted for a pause, while two members for a hike. Most economists believe the Federal Reserve will hike in December, with a further hike in the first quarter of 2027.

The Fed reiterated its commitment to returning inflation to 2%, signalling little willingness to tolerate persistently higher prices. However, it did advise that the decision will be data-dependent and that it will not risk an economic slowdown. Nevertheless, investors remain concerned over persistently high inflation.

So far, the outcome of the Federal Reserve’s rate decision and guidance is a weaker Dollar, lower Gold prices, and a downward swing among most indices.

NASDAQ - Technical Analysis and Market Expectations

Despite the latest events, most institutions continue to believe the NASDAQ will rise in the long term, but that the road will be ‘choppy’. However, this will depend on market conditions.

Key events that will impact the NASDAQ will now be the Core PCE Price Index, US GDP, and Amazon’s earnings report. Higher inflation and resilient US GDP growth could reinforce rate-hike expectations, adding further pressure on the NASDAQ. This pressure could intensify if Amazon, currently the index’s fifth most influential stock, also fails to meet earnings expectations.

In the short term, the price of the NASDAQ is trading below moving averages and the VWAP. In addition, the price remains on the bearish side of most oscillators. However, medium-term charts remain neutral as the price remains within range-bound conditions.

For bullish scenarios, the main bullish breakout level can be seen mainly at $29,637.00. Price action on the 30-minute chart will indicate clear bullish momentum at $29,800.00. Above these prices, buy signals can potentially materialise, particularly if inflation does not tick upwards. However, below $29,435.00, bearish signals could gain momentum.

Key Takeaways:

• The NASDAQ faces renewed downward pressure following hawkish Federal Reserve guidance and disappointing Alphabet earnings.
• Alphabet shares declined nearly 10%, while Microsoft’s stronger earnings supported a more moderate 2.9% gain.
• The Fed’s 10-2 vote reinforced expectations of further rate hikes amid persistent inflation concerns.
• Upcoming US inflation, GDP data, and Amazon earnings could influence the NASDAQ’s direction, with bearish momentum strengthening below 29,435.