Tech selloff puts buyers on defensive after Wednesday's slide

Buyers in technology stocks had their opportunity on Wednesday, but sellers wrested control on Thursday.

That sets the scene for the final North American trading session of the week. U.S. stock futures are slightly lower following Wednesday's steep technology declines, Treasury yields are recovering some of their sharp fall, and Middle East developments continue to keep oil markets on edge.

The dollar is mixed, rising against the euro, pound, yen, franc and Australian dollar, while edging lower against the Canadian and New Zealand dollars. With U.S. business surveys and consumer sentiment still on the calendar, the data could provide the next impetus for traders.

A technical look at the three major currency pairs—EURUSD, USDJPY and GBPUSD—outlines the bias, key levels and targets that could give control to either buyers or sellers.

Wednesday's selloff was concentrated in technology shares. The closing numbers were:

• Dow industrial average: Up 11.98 points, or 0.02%, at 52,873.28.

• S&P 500: Down 93.74 points, or 1.21%, at 7,663.43.

• Nasdaq Composite: Down 694.00 points, or 2.60%, at 26,008.86.

• Nasdaq 100: Down 863.83 points, or 2.90%, at 28,958.69.

• Russell 2000: Up 3.01 points, or 0.11%, at 2,784.03.

Investors remain skeptical that the returns from AI investment will justify the outlay, with semiconductor weakness adding to the selling pressure. Market breadth was negative, with 1,734 Nasdaq decliners versus 1,471 advancers. The damage extended beyond a few heavily weighted names.

Apple was the exception among the Magnificent Seven, closing higher as the other six fell. The steep drop in Treasury yields failed to provide the usual support for growth stocks, pointing to market focus on earnings expectations, investment costs and whether current valuations are justified by future profits.

For buyers, a lower price is merely a starting point. What counts is whether prices can reclaim and hold broken technical levels. Until that happens, any bounce may be a correction within a seller-controlled move.

Additional context is available in Nasdaq sinks as chip stocks tumble.

Current futures readings show:

• Dow futures: Down 31.4 points.

• S&P 500 futures: Down 17 points.

• Nasdaq 100 futures: Down 7.50 points.

These declines are far smaller than Wednesday's cash-market losses, but buyers have yet to show a significant rebound.

The dollar is mixed, with the Swiss franc under the most pressure. USDCHF gained 0.46% near 0.8242. The greenback also rose against sterling and the euro, with GBPUSD down 0.22% near 1.3370 and EURUSD down 0.20% near 1.1192.

Against the yen, the dollar edged up 0.08% to near 156.89, while AUDUSD fell 0.06% to near 0.7015.

The Canadian and New Zealand dollars bucked the trend. USDCAD declined 0.05% to near 1.4001, and NZDUSD rose 0.02% to near 0.5683. These small moves underscore the mixed nature of the dollar market.

Currency ranges still offer room for movement in several pairs. EURUSD traded from 1.1185 to 1.1226, a 41-pip range, or about 63% of its 65-pip average. GBPUSD ranged from 1.3370 to 1.3407, a 37-pip range, or about 52% of its 71-pip average.

Both have space to extend if North American data provide a catalyst.

USDJPY has already covered more ground, trading from 156.08 to 157.15, a 107-pip range, or about 111% of its 96-pip average. That does not preclude further extension but indicates the pair has already exceeded a typical day's range.

USDCHF has also nearly filled its average range, trading from 0.8193 to 0.8243, a 50-pip range, or about 96% of its 52-pip average.

Quieter pairs have more unused range. USDCAD traded from 1.3998 to 1.4021, a 23-pip range, or about 35% of its 66-pip average. AUDUSD's range of 0.7005 to 0.7024 is 19 pips, or about 41% of its 46-pip average. NZDUSD ranged from 0.5680 to 0.5699, also 19 pips, or about 46% of its 41-pip average.

USDCAD has the most room relative to its normal range, with Canadian retail sales still ahead. An average range is context, not a requirement that the market travel the remaining distance.

Treasury yields are rising this morning. The 2-year yield is at 4.6924%, up 5.74 basis points, while the 5-year is at 4.8210%, up 5.30 basis points. The 10-year is near the 5% level at 4.9966%, up 4.36 basis points, and the 30-year is at 5.3092%, up 2.22 basis points.

The move follows Wednesday's decline of roughly 15–19 basis points across those maturities.

The question today is whether the data will support that drop in yields or encourage further retracement higher. Growth readings will matter, but so will inflation details.

Overnight headlines offer little comfort for traders hoping for a quick resolution to the Iran conflict.

According to a Financial Times report cited in the news feed, U.S. Ambassador to the United Nations Mike Waltz said the U.S. is prepared for a prolonged standoff with Iran and acknowledged the stalemate could persist a year from now.

Separately, Fox News reported that Iran's IRGC threatened to target U.S. bases if commercial ships continued transiting the Strait of Hormuz. The feed also carried a Sabereen report of a missile launch by Yemeni armed forces toward Saudi interests, an attributed report.

Against that backdrop, December WTI reached a fresh session high of $101.19.

The market continues to seek a diplomatic breakthrough. In the meantime, threats to shipping and regional energy infrastructure keep supply risks priced in. Higher oil also complicates the inflation outlook just as investors question parts of the growth story.

Gold fell back below the $4,000 level, reaching $3,986.85, before bouncing. Buyers responded below the round number. The key is whether they can sustain a recovery above $4,000. A brief move back above followed by another failure would leave the rebound vulnerable. Getting above and staying above would give buyers a better foothold.

Copper has reached an important decision point, falling below its 100-hour moving average at $6.449.

That moving average now gives traders a level to lean against. Staying below is more bearish and gives sellers short-term control. If sellers can maintain that break, the 200-hour moving average at $6.226 becomes the next downside target.

Conversely, a move back above $6.449—and staying above—would weaken the sellers' case. Sellers have made a play. Now they need to hold the break.

European flash PMI readings were mixed, with the broader euro-area results falling short of expectations.

France was the weak spot. Manufacturing PMI fell to 49.3 versus 50.5 expected, while services dropped to 48.4 versus 50.7 expected. Both readings are below 50, indicating contraction.

Germany's manufacturing sector held up better, with a reading of 54.2 versus 53.5 expected, but services missed at 51.7 versus 52.5 expected.

For the euro area overall, manufacturing came in at 52.4 versus 52.7 expected, while services registered 51.7 versus 52.6 expected. Those readings still indicate expansion, but at a slower pace than anticipated.

European equities are also lower in the supplied snapshot:

• Germany's DAX: Down 0.75%.

• France's CAC 40: Down 0.70%.

• U.K. FTSE 100: Down 0.50%.

• Spain's IBEX: Down 0.20%.

• Italy's FTSE MIB: Down 0.42%.

At 8:30 AM ET, Canadian retail sales are expected to rise 1.3%, following a 0.7% decline. Sales excluding autos are expected to increase 1.1%, also following a 0.7% decline. With USDCAD's range still relatively narrow, the report could provide a catalyst for an extension.

At 9:45 AM ET, the U.S. flash PMIs will provide an early look at October business conditions. Manufacturing is expected at 55.4 versus 55.9 previously, while services are expected at 57.9 versus 58.8. Both forecasts remain comfortably above 50. Traders will also be looking at what businesses say about prices, hiring and new orders.

At 10:00 AM ET, the final University of Michigan consumer sentiment reading is expected to remain at 46.3. The supplied calendar shows the previous one-year inflation expectations reading at 4.7%. With oil elevated, the inflation expectations details deserve attention alongside the headline sentiment number.

EURUSD is trading closer to the bottom of its overnight range, with 1.1185 the session low and 1.1226 the high. Sellers have the intraday directional advantage, but a break below the low would need follow-through. A failed break would give buyers an opening to push back into the range.

USDJPY has already exceeded its average daily range. The 156.08 low and 157.15 high frame the session so far. After that amount of movement, technical levels should define the risk. Chasing a move without a nearby level to lean against makes managing that risk more difficult.

GBPUSD is trading at the bottom of its displayed range near 1.3370, with 1.3407 the session high. Sellers are pressing, and the pair still has room relative to its average range. Holding below the low would support an extension. Failure to stay below would take some of the immediate pressure off.

Determining which side is in control, what would shift that control and where the next targets lie is the objective.