Tech Stocks Hold Steady Ahead of Pivotal Fed Meeting

The Nasdaq 100 index marked time as the new trading week began, with investors adopting a cautious stance in anticipation of the Federal Reserve’s imminent policy decision. Beneath the surface calm, a significant sector rotation provided notable movement. Semiconductor stocks found support from renewed enthusiasm for artificial intelligence, but the index was held back from reaching new highs by pressure on major components like Tesla.

Semiconductor Strength Offsets Tesla Weakness

A divergent picture emerged among the index’s constituents. Broadcom shares advanced 2.3% following reports of advanced talks with Microsoft to develop custom AI chips. This positive sentiment lifted peers such as Micron and Lam Research.

In stark contrast, Tesla shares declined 3.4% after a downgrade by Morgan Stanley. Analysts cited valuation concerns and a weakening demand outlook for electric vehicles in 2026. Marvell Technology was another casualty, falling 7% as investors grew concerned that a potential Broadcom-Microsoft partnership would heighten competitive pressures.

Should investors sell immediately? Or is it worth buying NASDAQ 100?

Merger Speculation Ignites Media Sector

Merger and acquisition rumors also generated activity. Warner Bros. Discovery gained 3.7% on reports of a hostile takeover bid from Paramount Global. Conversely, this news weighed on Netflix, which fell 3.5%, as the market anticipated intensified competition from a potentially strengthened rival.

All Eyes on the Federal Reserve

The prevailing wait-and-see attitude is primarily calendar-driven, with the Fed’s rate decision scheduled for Wednesday. Although the market has firmly priced in a rate cut, uncertainty surrounding the policy outlook for 2026 is prompting investor restraint. Adding to the cautious mood on Monday, rising bond yields dampened risk appetite. The yield on the benchmark 10-year U.S. Treasury note climbed to 4.17%, a move that traditionally pressures the valuations of high-growth technology stocks.

Looking ahead to Tuesday’s session, further hesitation is expected. The Nasdaq 100 closed at 25,698 points. Technically, the broader uptrend remains intact as long as the index holds above the near-term support level at 25,650. However, a break below this level on rising volume could trigger a market correction even before the Fed meeting concludes.