Nasdaq Pulls Back as Oracle Slide Tests AI Optimism and Yields Climb

What to Know

• The Nasdaq Composite edged lower approaching Thursday’s mid-session while remaining in an uptrend on the daily swing chart.
• A move through 27288.79 would signal a resumption of the uptrend, while a break through 25802.96 would turn the main trend down.
• The short-term range runs from 25802.96 to 27288.79, placing the key retracement zone at 26545.88 to 26370.55.
• Trader reaction to the 26545.88 to 26370.55 zone is likely to determine whether the pullback attracts buyers or extends toward the 50-day moving average.
• The Nasdaq remains on the strong side of the 50-day moving average at 26141.74, keeping dip-buying potential in focus.
• Oracle shares dropped 5% after concerns emerged around a possible delay tied to a New Mexico data-center project being developed by a Blue Owl Capital unit.
• Oracle cited force majeure protection if the project is delayed, while the company is not trying to leave the project.
• The 30-year Treasury yield reached 5.446% Thursday, the 10-year yield pushed near 5.15%, and the two-year yield hit its highest level since 2023 earlier in the week.
• Fed funds futures showed October rate-hike odds above 70%, up from roughly 55% a week ago.
• Brent crude traded around $105 per barrel and West Texas Intermediate was near $93, adding to inflation and rate concerns.

Nasdaq Pullback Keeps Key Technical Zone in Focus

The Nasdaq Composite weakened into Thursday’s mid-session as traders reassessed the strength of the technology bid against a backdrop of rising yields, firm U.S. activity data and renewed questions around artificial intelligence infrastructure spending. The index is correcting from its record at 27288.79, but the broader daily swing-chart structure still shows the main trend as up unless the market breaks below 25802.96.

For technical traders, the immediate test is not only whether the Nasdaq can hold its recent gains, but whether buyers respond at the next clearly defined retracement area. The short-term range from 25802.96 to 27288.79 places the retracement zone at 26545.88 to 26370.55. That band is now the market’s key battleground. A controlled pullback into this area could invite fresh demand from traders who still view the index as being supported by the larger uptrend.

The index is also trading on the strong side of the 50-day moving average at 26141.74, which helps explain why some market participants may still look for support rather than a deeper reversal. If buyers step in decisively in the retracement zone and produce enough upside momentum, chart watchers may look for another attempt to challenge the all-time high at 27288.79. A trade through that level would signal a resumption of the uptrend.

The risk for bulls is that sellers continue to press the index through the lower boundary of the retracement zone. If the 61.8% level at 26370.55 fails, downside momentum could extend the move toward the 50-day moving average at 26141.92. That would shift the discussion from a routine pullback toward a more important test of medium-term trend support.

Oracle’s Drop Puts AI Spending Narrative Under Pressure

Oracle became a focal point for the technology sector after concerns around a New Mexico project raised questions about the durability and timing of data-center spending tied to the AI theme. The project is being developed by a Blue Owl Capital unit, and Oracle sent a letter citing force majeure protection if the project is delayed. The important distinction for investors is that Oracle is not trying to leave the project, but the possibility of delay was enough to unsettle traders.

The stock dropped 5% as the market weighed the difference between a delay and a cancellation. In a softer rate environment, investors might have been more willing to look past the headline and maintain exposure to a major AI infrastructure beneficiary. With the 10-year Treasury yield near 5.15%, however, tolerance for uncertainty has narrowed. When discount rates rise, high-growth narratives often face more demanding scrutiny, especially when valuations already reflect strong expectations.

Oracle has been one of the stocks traders bought for data-center exposure. A possible project delay gives holders a reason to lighten positions, particularly after a long period in which the AI trade carried a large share of market enthusiasm. The issue is not simply whether one project moves on schedule. It is whether investors begin questioning the pace, cost and execution risks behind the broader AI infrastructure buildout.

For the Nasdaq, the Oracle move mattered because it landed at the same time yields were rising and the market was already digesting tighter policy expectations. Technology shares can absorb company-specific volatility when liquidity conditions are supportive. When Treasury yields are climbing, the same news can have a larger impact because traders become less willing to pay elevated multiples for future growth.

Treasury Yields Reinforce the Pressure on Growth Shares

The Treasury market remained a major headwind for technology on Thursday. The 30-year Treasury yield reached 5.446%, while the 10-year pushed near 5.15%. Earlier in the week, the two-year yield hit its highest level since 2023. That combination reflects a rate market that continues to price firm growth, persistent inflation risk and the possibility that the Federal Reserve may need to stay restrictive for longer.

Fed funds futures showed October rate-hike odds above 70%, up from roughly 55% a week ago. That move suggests the rate market has already adjusted meaningfully ahead of the meeting. For equity traders, the repricing matters because higher policy-rate expectations tend to increase the hurdle for risk assets. Growth stocks are particularly sensitive because much of their valuation depends on earnings expected farther into the future.

Strong PMI data, hawkish Federal Reserve commentary and another rally in crude oil have all fed the move in yields. The message from the bond market is that strong growth may support corporate revenue, but it also gives policymakers more room to keep rates tight. That tension is central to Thursday’s Nasdaq trade. Good economic news has not translated into a stronger bid for technology because the rate implications are dominating the growth implications.

PMI Strength and Oil Prices Keep Inflation Concerns Alive

S&P Global’s manufacturing and services reports showed that U.S. activity remains strong. That matters for equities because solid activity can support earnings expectations, but it also complicates the path for monetary policy. BMO noted that the numbers leave room for policy rates and Treasury yields to move higher, with supply bottlenecks and higher fuel and transport costs still feeding inflation pressures.

Energy prices added to that concern. Brent crude oil futures traded around $105 per barrel, while West Texas Intermediate crude oil futures were near $93. Higher oil prices can filter into transportation, production and consumer costs, making the inflation outlook harder for policymakers to ignore. When energy prices rise alongside strong activity data, the market may view the Federal Reserve as having less reason to ease its stance.

That is why the Nasdaq weakened even as the economic data remained solid. The market is not rejecting growth outright. Instead, traders are focusing on the possibility that hot data keeps the Federal Reserve in play and keeps yields climbing. In that environment, technology shares can struggle even when corporate demand signals appear healthy.

UBS Sees Equity Upside but Expects Volatility to Stay Elevated

UBS views the current energy disruption risk as limited and sees the inflation shock as not broad enough to derail growth. The firm still favors equity upside, which suggests that not all market participants see the yield move and energy rally as reasons to abandon risk assets. However, UBS also sees geopolitical risk, inflation, government debt and AI spending as reasons for volatility to remain high.

That balanced outlook captures the current Nasdaq setup. The index remains in an uptrend by the daily swing-chart definition, and strong growth can still support revenue. At the same time, the path higher may be uneven if rates continue to reset and investors become more selective about AI-linked names. The market is no longer treating every data-center headline as automatically bullish. Execution risk, funding conditions and project timing are receiving closer attention.

Oracle Levels and Nasdaq Support Are the Near-Term Watch Points

Oracle needs to clarify what force majeure means for the New Mexico project and how any delay would affect its broader data-center exposure. The stock opened lower, fell through its 50-day moving average and reached $133.48. If sellers keep Oracle under $141.94, market participants may continue to treat the issue as more than a one-day headline.

For the Nasdaq Composite, the first support zone remains 26545.88 to 26370.55. Holding that area would give buyers a chance to stabilize the index and potentially set up a renewed push toward 27288.79. Failure to hold the zone would turn attention toward the 50-day moving average at 26141.92, where a more important test of trend support could develop.

The broader setup is clear: the 10-year yield is near 5.15%, Brent is around $105, and Fed funds futures are carrying October hike odds above 70%. Those conditions help explain why the technology bid is not following through. Until yields ease or AI-linked spending concerns fade, the Nasdaq may remain vulnerable to additional volatility around its key technical levels.

Frequently Asked Questions (FAQs)

Why is the Nasdaq Composite moving lower?

The Nasdaq Composite is moving lower as rising Treasury yields, stronger U.S. activity data, higher oil prices and concerns around Oracle’s data-center project weigh on technology sentiment. The index remains in an uptrend on the daily swing chart, but the pullback has put key support levels in focus.

What level would signal a resumption of the Nasdaq uptrend?

A trade through 27288.79 would signal a resumption of the Nasdaq Composite’s uptrend. That level is also the all-time high referenced by technical traders watching whether buyers can regain control after the current pullback.

What level would turn the Nasdaq trend down?

The main trend would turn down on a break through 25802.96. Until that happens, the daily swing-chart structure still classifies the broader trend as up, even though the index is currently correcting from its record.

What is the key Nasdaq support zone?

The key retracement zone is 26545.88 to 26370.55, based on the short-term range from 25802.96 to 27288.79. Trader reaction to this zone is likely to determine whether the pullback attracts buyers or extends toward the 50-day moving average.

Why did Oracle shares drop?

Oracle shares dropped 5% after concerns emerged around a possible delay tied to a New Mexico project being developed by a Blue Owl Capital unit. Oracle cited force majeure protection if the project is delayed, while the company is not trying to leave the project.

How are Treasury yields affecting technology stocks?

Higher Treasury yields pressure technology stocks by raising the discount rate applied to future earnings. With the 10-year yield near 5.15% and the 30-year yield reaching 5.446%, traders have become more cautious toward growth-heavy and AI-linked names.

What role are oil prices playing in the market move?

Oil prices are adding to inflation concerns. Brent crude traded around $105 per barrel and West Texas Intermediate was near $93, reinforcing worries that higher fuel and transport costs could keep pressure on inflation and support a tighter policy stance.

What are traders watching next?

Traders are watching whether the Nasdaq holds 26545.88 to 26370.55, whether Oracle remains under $141.94, and whether yields continue to climb. The 10-year yield near 5.15% and October rate-hike odds above 70% remain central to the technology market’s near-term direction.