Date: 28th July 2026.
NASDAQ Sell-off Deepens: Why Stocks Are Falling and What Happens Next.
The NASDAQ is declining for the fifth consecutive day as the global stock sell-off gains momentum. All global indices are trading in the red on Tuesday, with some stock exchanges even temporarily halting sell orders. The KOSPI (Korean Stock Index) stopped trading on two occasions during the Asian session and has so far fallen 10%.
Even though all global indices are trading lower, US and Asian indices are witnessing the strongest declines. The NASDAQ is particularly in the spotlight as it falls to its lowest point since 5 May just before the Federal Reserve rate decision and major tech earnings.
The NASDAQ and global indices are declining due to investor fear of over AI spending, high stock prices, and widening credit spreads. Widening credit spreads are known to be negative for stocks, as investors deem the company to be higher risk. So far, investors have ignored the widening spreads due to higher earnings and the AI-trend. However, as stock prices rise to considerably high levels, investors are becoming cautious and are partially taking profits.
Most company earnings so far, including Alphabet, have beaten expectations, but at the same time have confirmed higher borrowing and investments in AI. Analysts now advise that companies need to beat expectations by a larger percentage in order to gain interest from investors. This is due to the widening credit spreads.
Credit spreads for Alphabet and Oracle are at the widest on record. For Amazon, they are at their widest since 2018, and for Apple, the widest since 2011. Nonetheless, the stocks that drove the NASDAQ lower were NVIDIA, Space Exploration Technology, and Advanced Micro Devices. NVIDIA stock fell 4.99% on Monday and continues to decline during this morning’s session.
Upcoming quarterly earnings reports from influential companies on Wednesday and Thursday will continue to strongly influence the index. Tomorrow evening, Microsoft and Meta will make their reports public, while Apple and Amazon will release theirs on Thursday evening. The four companies make up 30% of the NASDAQ. Analysts advise that the companies will need to strongly beat expectations and not show significantly higher borrowing in order to prompt higher demand for their stocks.
Lastly, the Federal Reserve will make its interest rate decision public tomorrow evening at 18:00 GMT+3.
Markets were split on whether the Federal Reserve would raise the Federal Funds Rate tomorrow evening. Nevertheless, the consensus among economists up to now was that the Fed would pause in July before hiking in September. This is now changing, with some fund managers contemplating whether the Fed chairman, Kevin Warsh, will opt for a surprise hike.
Citadel Securities believes the Federal Reserve could surprise markets with a 25-basis-point interest rate hike at this week’s meeting. Yesterday, the firm argued that such a move would reinforce Fed Chair Kevin Warsh’s commitment to restoring price stability and demonstrate that policymakers are serious about keeping inflation under control. Citadel also believes a rate hike now would provide greater flexibility to lower rates later if economic conditions weaken.
This is something that can also be seen among US bond yields, which have been trading at a recent high. The FedWatch Tool also indicates that the possibility of a rate hike tomorrow has risen from 26% to 38%. If the Federal Reserve does indeed hike or seems particularly hawkish, the stock market could potentially remain under pressure.
Currently, the price of the NASDAQ is showing a clear retracement pattern. The previous retracement, seen in December to March, measured 13.50%. The NASDAQ is currently trading 10% lower, meaning, based on previous patterns, the price may potentially fall further. At the same time, risks do remain, as most economists believe the Federal Reserve will adjust interest rates in the upcoming months.
For this reason, a bullish rebound cannot be confirmed, particularly before tomorrow’s Federal Reserve rate decision and the vital upcoming earnings reports. These will be key price drivers, which may either drive the price lower or trigger a rebound. By the end of the week, investors will have a broader set of economic data and corporate earnings to make more informed decisions.
HFM - NASDAQ Daily Chart
The 15-minute chart continues to show short-term weakness, with the index making lower highs and lower lows. Price remains below the short-term moving averages, while momentum indicators suggest sellers remain in control. However, the daily chart suggests the NASDAQ remains in a broader long-term uptrend, but the recent pullback has weakened momentum considerably.
If the stock market is to witness a crash and major sell-off, investors will be focusing on two possible areas. The resistance being flipped into a support level can be seen at $26,252.00, which is a 14.80% decline from the recent high. The second is based on previous stock market crashes, which, on average, are around 25%. This would take the price to $23,135.00. If the price is to rebound, the first level traders will focus on is the resistance level at $30,769.00.
Credit spreads measure the difference between the interest rate a company pays to borrow and the yield on a risk-free government bond. Wider credit spreads indicate investors perceive higher credit risk, while narrower spreads suggest stronger confidence in the company’s financial health.
Always trade with strict risk management. Your capital is the single most important aspect of your trading business.
Please note that times displayed based on local time zone and are from time of writing this report.
Click HERE to access the full HFM Economic calendar.
Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding of how markets work. Click HERE to register for FREE!
Click HERE to READ more Market news.
Michalis Efthymiou
HFMarkets
Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
NASDAQ Sell-off Deepens: Why Stocks Are Falling and What Happens Next.
The NASDAQ is declining for the fifth consecutive day as the global stock sell-off gains momentum. All global indices are trading in the red on Tuesday, with some stock exchanges even temporarily halting sell orders. The KOSPI (Korean Stock Index) stopped trading on two occasions during the Asian session and has so far fallen 10%.
Even though all global indices are trading lower, US and Asian indices are witnessing the strongest declines. The NASDAQ is particularly in the spotlight as it falls to its lowest point since 5 May just before the Federal Reserve rate decision and major tech earnings.
The NASDAQ and global indices are declining due to investor fear of over AI spending, high stock prices, and widening credit spreads. Widening credit spreads are known to be negative for stocks, as investors deem the company to be higher risk. So far, investors have ignored the widening spreads due to higher earnings and the AI-trend. However, as stock prices rise to considerably high levels, investors are becoming cautious and are partially taking profits.
Most company earnings so far, including Alphabet, have beaten expectations, but at the same time have confirmed higher borrowing and investments in AI. Analysts now advise that companies need to beat expectations by a larger percentage in order to gain interest from investors. This is due to the widening credit spreads.
Credit spreads for Alphabet and Oracle are at the widest on record. For Amazon, they are at their widest since 2018, and for Apple, the widest since 2011. Nonetheless, the stocks that drove the NASDAQ lower were NVIDIA, Space Exploration Technology, and Advanced Micro Devices. NVIDIA stock fell 4.99% on Monday and continues to decline during this morning’s session.
Upcoming quarterly earnings reports from influential companies on Wednesday and Thursday will continue to strongly influence the index. Tomorrow evening, Microsoft and Meta will make their reports public, while Apple and Amazon will release theirs on Thursday evening. The four companies make up 30% of the NASDAQ. Analysts advise that the companies will need to strongly beat expectations and not show significantly higher borrowing in order to prompt higher demand for their stocks.
Lastly, the Federal Reserve will make its interest rate decision public tomorrow evening at 18:00 GMT+3.
Markets were split on whether the Federal Reserve would raise the Federal Funds Rate tomorrow evening. Nevertheless, the consensus among economists up to now was that the Fed would pause in July before hiking in September. This is now changing, with some fund managers contemplating whether the Fed chairman, Kevin Warsh, will opt for a surprise hike.
Citadel Securities believes the Federal Reserve could surprise markets with a 25-basis-point interest rate hike at this week’s meeting. Yesterday, the firm argued that such a move would reinforce Fed Chair Kevin Warsh’s commitment to restoring price stability and demonstrate that policymakers are serious about keeping inflation under control. Citadel also believes a rate hike now would provide greater flexibility to lower rates later if economic conditions weaken.
This is something that can also be seen among US bond yields, which have been trading at a recent high. The FedWatch Tool also indicates that the possibility of a rate hike tomorrow has risen from 26% to 38%. If the Federal Reserve does indeed hike or seems particularly hawkish, the stock market could potentially remain under pressure.
Currently, the price of the NASDAQ is showing a clear retracement pattern. The previous retracement, seen in December to March, measured 13.50%. The NASDAQ is currently trading 10% lower, meaning, based on previous patterns, the price may potentially fall further. At the same time, risks do remain, as most economists believe the Federal Reserve will adjust interest rates in the upcoming months.
For this reason, a bullish rebound cannot be confirmed, particularly before tomorrow’s Federal Reserve rate decision and the vital upcoming earnings reports. These will be key price drivers, which may either drive the price lower or trigger a rebound. By the end of the week, investors will have a broader set of economic data and corporate earnings to make more informed decisions.
HFM - NASDAQ Daily Chart
The 15-minute chart continues to show short-term weakness, with the index making lower highs and lower lows. Price remains below the short-term moving averages, while momentum indicators suggest sellers remain in control. However, the daily chart suggests the NASDAQ remains in a broader long-term uptrend, but the recent pullback has weakened momentum considerably.
If the stock market is to witness a crash and major sell-off, investors will be focusing on two possible areas. The resistance being flipped into a support level can be seen at $26,252.00, which is a 14.80% decline from the recent high. The second is based on previous stock market crashes, which, on average, are around 25%. This would take the price to $23,135.00. If the price is to rebound, the first level traders will focus on is the resistance level at $30,769.00.
Credit spreads measure the difference between the interest rate a company pays to borrow and the yield on a risk-free government bond. Wider credit spreads indicate investors perceive higher credit risk, while narrower spreads suggest stronger confidence in the company’s financial health.
Always trade with strict risk management. Your capital is the single most important aspect of your trading business.
Please note that times displayed based on local time zone and are from time of writing this report.
Click HERE to access the full HFM Economic calendar.
Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding of how markets work. Click HERE to register for FREE!
Click HERE to READ more Market news.
Michalis Efthymiou
HFMarkets
Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.