Dow Jones hits record high as Nasdaq slumps, sparking intramarket divergence

AI trade jitters spark tech sell-off as Dow Jones leads gains

United States (US) stocks closed sharply lower on Friday, with Broadcom tumbling in the wake of Oracle’s post-earnings sell-off, dragging the broader artificial intelligence (AI) complex with it.

The move accelerated a rotation out of technology names into cyclicals and defensives. For the week, the Dow Jones posted its highest weekly close on record, gaining 503 points (+1.05%). In contrast, the S&P 500 shed 0.63%, while the Nasdaq 100 fell a steep 1.93%.

This stark contrast in performance across the major US equity indices is a classic example of intramarket divergence – where markets within the same asset class move in opposing directions at or near new highs. Such divergences often appear at important turning points and tend to carry the most weight when confirmed by other technical signals or fundamental developments.

On the fundamental side, concerns around the AI trade – sky-high valuations and capital expenditure (capex) outpacing earnings – were reignited last week. Oracle missed revenue forecasts and raised financial year (FY) 2026 capex guidance by approximately $15 billion. Broadcom beat estimates but flagged margin pressure from a rising mix of lower-margin custom AI chips.

Key data ahead

Looking ahead, this week brings the combined October to November non-farm payrolls (NFP) report and the November consumer price index (CPI) print. The November inflation data is expected to show core inflation holding near 3%, while the expected outcome of Wednesday morning’s NFP report is previewed below.

US non-farm payrolls

Date: Wednesday, 17 December at 12.30am AEDT

The September NFP report, which was finally released nearly seven weeks late due to the US government shutdown, offered a sliver of relief after a dismal August print. NFP rose by 119000, beating consensus expectations of just 50,000 additions. The unemployment rate ticked up to 4.4% from 4.3% prior.

The Bureau of Labor Statistics (BLS) announced on 19 November that it would not publish a full Employment Situation report for October due to the government shutdown. The BLS will salvage what it can, folding October’s partial NFP data into this week’s November release.

The market has pencilled in a rise of 50,000 in November, with the unemployment rate remaining at 4.4%. The interest rates market is pricing in two full 25 basis point (bp) Federal Reserve (Fed) rate cuts in 2026.

US unemployment rate chart

Nasdaq 100 technical analysis

The Nasdaq 100’s (and the S&P 500’s) successful defence of critical support on Friday, 21 November, followed by a strong rally the next Monday, prompted us to shift to a bullish bias across US equities, a view that has played out well, particularly in the Dow Jones, which has soared to new highs.

However, the recent emergence of intramarket divergence at or near record highs, with the Nasdaq notably underperforming the Dow Jones, has caught our attention and leaves us with a mixed picture as to what comes next. As a result, we are moving to a more neutral stance on the Nasdaq 100 for now.

We will watch closely for either a pullback toward the 23,500 zone, which could present a fresh buying opportunity, or a convincing break above resistance near 26,200, which would reopen the upside toward 27,000.

Nasdaq 100 daily chart

S&P 500 technical analysis

As noted above, the Nasdaq 100’s and the S&P 500’s successful defence of critical support on Friday, 21 November, followed by a strong rally the next Monday, prompted us to shift to a bullish bias across US equities, a view that has played out well, particularly in the Dow Jones, which has soared to new highs.

However, the recent emergence of intramarket divergence near these peaks has caught our attention: the high-flying Dow continues to lead, the Nasdaq 100 lags noticeably, and the S&P 500 sits in the middle, undecided whether to follow the Dow higher or the Nasdaq lower.

Given that we have now entered the seasonally strong year-end period, we are inclined to give the benefit of the doubt to further upside, allowing the broader market to track the Dow toward new highs.

That said, a sustained break below support near 6800 – 6760  for the S&P 500 would serve as a clear warning that the S&P 500, and potentially equities overall, is instead set to align with the Nasdaq’s relative weakness.

S&P 500 daily chart

• _{Source: TradingView. The figures stated are as of 15 December 2025. Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation.}