US Tech forecast: the index fails to form a directional trend

The US Tech index tested the support level but failed to extend its decline. The US Tech forecast for next week is negative.

US Tech forecast: key takeaways

• Recent data: preliminary US services PMI came in at 51.7 in February
• Market impact: the data has a mixed impact on the technology sector

US Tech fundamental analysis

The US services PMI print at 51.7, below the forecast of 52.3 and the previous reading of 52.7, indicates that the US service sector is still expanding (above 50.0), but growth is slowing and came in weaker than expected. Since services make up a large share of the US economy, the market typically interprets this as a signal of more moderate demand in the coming months and potentially more restrained revenue growth for companies tied to domestic consumers and corporate spending.

For the US Tech index, such a release frequently has a mixed, but often moderately favourable short-term effect, as the technology sector tends to react more than others to shifts in rate expectations and bond yields. When yields fall, the present value of future cash flows rises, supporting growth-stock valuations, especially large-cap tech names and businesses with resilient margins. At the same time, weaker service momentum can also imply that corporate clients may become more cautious with spending, which increases the risk of slower sales growth in segments tied to company budgets.

US Tech technical analysis

For the US equity market, the effect typically reflects two opposing components. On the one hand, weaker PMI data raises the probability of profit deceleration in cyclical sectors and can reduce overall risk appetite. On the other hand, cooling activity often eases concerns about an overheating economy and inflationary pressures, which can push government bond yields lower and lead to softer expectations for the interest rate path.

The US Tech index has started to decline. The nearest resistance level is around 25,860.0, while the key support level has formed near 24,455.0. Prices currently remain in a sideways range and are testing the support zone. If pressure persists, the next downside target could be 24,010.0.

The US Tech price forecast outlines the following scenarios:

• Pessimistic US Tech scenario: a breakout below the 24,455.0 support level could send the index down to 24,010.0
• Optimistic US Tech scenario: a breakout above the 25,860.0 resistance level could boost the index to 26,560.0

Summary

In practical terms, this data alone does not signal a reversal, since the index remains in expansion territory; however, it increases the likelihood that the market will pay closer attention to upcoming releases on employment, inflation, and consumer demand. Meanwhile, high-quality large-cap technology companies may look relatively better than the broader market due to the impact of interest rate expectations. The next downside target could be 24,010.0.

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