Nasdaq Faces Correction as S&P 500 Tests Key Support Levels Amid Market Jitters

The stock market experienced a significant downturn recently, with the tech-heavy Nasdaq Composite facing a correction due to rising tariff concerns and apprehension surrounding the outlook for the artificial intelligence (AI) sector. This steep selloff signals a volatile phase for investors, particularly those heavily invested in technology stocks.

Market Overview: Nasdaq and S&P 500 Diverge

On Thursday, the Nasdaq Composite (COMP) dropped an alarming 483.48 points, or 2.6%, closing at 18,069.26. This decline marks a **10.4% pullback** from its record high of 20,173.89 set on December 16, 2024. A market correction is characterized by such a 10% decline from recent peaks and is an important indicator for investors to monitor.

In a broader context, the S&P 500 (SPX) concluded the day down 104.11 points, or 1.8%, settling at 5,738.52. This was a significant drop as the index slipped below the **critical 200-day moving average (MA)** near 5,731, which analysts identify as a “line in the sand.” Closing below this level raises the potential for further declines.

Factors Invoking Market Anxiety

The selloff was primarily triggered by persistent worries related to **global trade tensions**, which have the potential to transverse into a broader economic slowdown or recession. These fears were heightened by tariff announcements from the U.S. government targeting imports from Mexico. President Donald Trump reassured markets with a social-media statement that 25% tariffs on certain goods would be paused until April for items compliant under the USMCA.

Despite these reassurances, investor confidence took a hit as results from **Marvell Technology Inc.** caused significant concern in the AI sector. Although the company’s earnings surpassed expectations, their revenue guidance disappointed investors. Consequently, Marvell’s stock (MRVL) plummeted nearly 20%, triggering a domino effect on other semiconductor stocks, serving as key players in the AI domain.

Selling Pressure Across Tech Stocks

The broader tech sector also faced losses; **Broadcom Inc.** (AVGO) witnessed a decline exceeding 6% prior to its earnings release. Notably, **Nvidia Corp.** (NVDA), a favorite among investors buoyed by AI hype, saw its shares drop 5.7%. Overall, Nvidia has recorded a 10% loss this week alone, essentially erasing six months of gains.

Technical Analysis and Support Levels

As the S&P 500 grapples with maintaining its ground above significant technical levels, analysts are eyeing the area around **5,650**. This number served as a resistance level in the previous fall and is now perceived as a potential support area for the index. Jonathan Krinsky, chief market technician at **BTIG**, pointed out that a dip below this level would add pressure on the index, putting investors on high alert.

It is also worth noting that when the S&P 500 last traded below its 200-day MA, it only stayed beneath that line for eight sessions, suggesting that rapid recoveries can occur in the face of sustained selling pressures. Previous instances showed resilience with the index quickly returning to an upward trajectory.

Future Considerations for Investors

The recent downturn serves as a reminder of the volatility characterizing the markets today. With analysis shifting towards the impending jobs report and speeches from financial authorities, including Federal Reserve Chair Jerome Powell, market participants will need to remain vigilant. A close below **5,529.74** would officially mark a correction for the S&P 500, which is already hovering **6.6% below its record high** set on February 19, 2025.

Similarly, the **Dow Jones Industrial Average** (DJIA) ended Thursday down 427.51 points, or 1%, closing at 42,579.08, a state which puts it 5.4% shy of its record finish at 45,014.04 from December 4, 2024. A notable alert is that closing below **40,512.64** would signify a correction for the Dow as well.

Conclusion

In summary, the recent downturn in the tech-heavy Nasdaq and broader markets are reflective of growing trade tensions and uncertain economic forecasts, intensifying investor caution. With significant technical levels on the line, traders should closely monitor reactions around these benchmarks in the coming days and weeks.

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Nasdaq Correction and S&P 500 Support Levels Tested Amid Market Volatility