US Tech forecast: the index enters a downtrend

The US Tech index has broken below a support level, but the downward momentum is weak. The US Tech forecast for next week is negative.

US Tech forecast: key takeaways

• Recent data: the US Federal Reserve’s policy rate remained at 3.75%
• Market impact: the current data is negative for the technology sector

US Tech fundamental analysis

The data appears moderately negative for the US Tech index and is restraining for the broader US stock market. Formally, the Federal Reserve did not change rates, which was expected; but the underlying signal is more important for the market than the fact that the 3.50-3.75% range remains. The regulator explicitly pointed to elevated uncertainty, acknowledged that higher energy prices are increasing inflation risks, and emphasised that further decisions are not predetermined and will be taken on a meeting-by-meeting basis. At the same time, the Fed’s median rate projection for the end of 2026 remained at 3.40%, meaning only very limited easing is expected rather than a quick shift to a more accommodative stance.

For the US Tech, this is an unfavourable signal primarily because the technology sector is the most sensitive to the cost of capital and to changes in rate expectations. When the market realises that the period of relatively high rates may drag on and bond yields rise, the appeal of companies whose valuation is heavily based on future earnings declines. This is why the market reaction after the meeting was cautious.

US Tech technical analysis

For the US stock market overall, the signal is more cooling than critically negative. On the one hand, the US economy shows no signs of a sharp decline: consumer spending remains resilient, business investment continues to grow, and the labour market is not showing any dramatic deterioration. On the other hand, the market is facing several constraints at once, with inflation remaining elevated, oil prices up, and the Fed not promising a near-term rate cut.

The US Tech index is showing downward momentum. The nearest resistance level is located around 25,195.0, while the main support level lies at 24,330.0. Prices are currently testing support again. If pressure persists, the next downside target could be around 23,575.0.

The US Tech price forecast outlines the following scenarios:

• Pessimistic US Tech scenario: a breakout below the 24,330.0 support level could send the index down to 23,575.0
• Optimistic US Tech scenario: a breakout above the 25,195.0 resistance level could boost the index to 25,855.0

Summary

For the US Tech, this Fed decision is negative, as the Fed not only held rates steady, but also signalled it is not ready to pivot quickly towards a more accommodative policy amid inflation risks. Until inflation begins to decline significantly and the oil factor eases, the US market will most likely remain sensitive to every new macroeconomic signal. The next downside target could be 23,575.0.

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