NQ Weekly Outlook
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May was clean. Nasdaq gained 8% on the month, SPX broke 7,600 for the first time ever, and tech was carrying literally everything. The AI sector had everyone piled in and sentiment was about as bullish as it gets. Going into this week NQ was sitting basically at all time highs.
Then Wednesday night Broadcom dropped earnings and started a chain reaction that didn't stop until Friday afternoon. By the time it was over NQ had dropped over 5% on the week, posting 2-week lows and erasing a significant chunk of May's gains in just two sessions.
On the surface the quarter looked fine. Revenue came in at $22.2 billion, up 48% year over year. AI chip sales hit $10.8 billion which was 143% growth compared to last year and beat their own internal forecast. EPS was $2.44 versus the $2.40 estimate. Clean beat across the board.
But the Q3 AI chip revenue guide came in at $16 billion. Wall Street was sitting at $17.2 billion. That $1.2 billion gap on the forward number was all the market needed to start selling. On top of that CEO Hock Tan held the full year AI chip target steady at $100 billion without raising it, and announced the company is going chips only instead of delivering the full integrated AI systems they had previously committed to.
Micron, ARM, and Nvidia all got dragged down with it. The entire semiconductor complex started unwinding as people started asking whether AI capex can actually keep growing at the pace that was being priced in. That is a dangerous question when the entire rally was built on that assumption.
Then Friday morning the May jobs report dropped and completely flipped the macro narrative. Payrolls came in at 172,000. The consensus was 80,000 to 85,000. That is more than double what anyone expected. The government also revised March and April higher by a combined 93,000 jobs. Unemployment held at 4.3% and wage growth stayed firm.
The 10 year Treasury yield shot to 4.54%, the 2 year hit 4.16%, and the 30 year crossed back above 5%. When yields move like that tech and growth stocks get hit hardest because rising rates compress future earnings on a discounted basis. NQ took the brunt of it.
This week is not light on catalysts. The two biggest events are Wednesday's CPI print and the buildup to the June 17 FOMC meeting under new Fed Chair Kevin Warsh. Everything on the calendar this week feeds directly into what Warsh does next week.
| Date | Event | Impact |
|---|---|---|
| MON JUN 9 | Markets digest Friday's jobs data. Expect continuation of rate hike repricing in futures. | MEDIUM |
| WED JUN 10 | May CPI Report — 8:30 AM ET. Most important print of the week. April came in at 3.8% YoY and 0.6% MoM. If May comes in hot again it could send NQ right back to test 28,781 and potentially lower. | HIGH |
| THU JUN 11 | PPI data and weekly jobless claims. Secondary inflation read. Confirms or contradicts Wednesday's CPI. | MEDIUM |
| FRI JUN 12 | Michigan Consumer Sentiment. Gauge on how the average consumer is feeling about prices and the economy heading into the FOMC. | MEDIUM |
| WED JUN 17 | FOMC Decision — First meeting under Chair Warsh. All of this week's data builds toward this. Markets will be watching closely for any signal on whether a hike is actually on the table or if Warsh holds steady. | CRITICAL |
Broadcom's business is not broken. The numbers are still growing fast and AI demand is real. But the sector got extremely crowded, expectations got priced for perfection, and one guide miss was enough to start the unwind. Combine that with a labor market that refuses to cool and inflation still running above the Fed's 2% target and you have a setup where tech gets sold hard.
This week the CPI print on Wednesday is the defining moment. Hot inflation confirms the rate hike narrative and NQ likely tests lower. A softer number gives bulls something to work with and could set up a relief bounce into the FOMC the following week.
Whether this is a healthy reset before another leg higher or the start of something bigger is still the question. Easy money on the long side is not as obvious as it was two weeks ago. Manage size, know your levels, and don't get caught sleeping on Wednesday morning.
Not financial advice · For informational purposes only
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