The Nasdaq 100 took a significant hit on Thursday, sliding 1.6% as investors adopted a cautious stance in anticipation of Federal Reserve Chair Jerome Powell's much-anticipated speech at the Jackson Hole Symposium, scheduled for Friday at 10:00 a.m. ET.

With market participants eagerly seeking insights on the future path of interest rates and the broader economic landscape, the session was marked by a shift towards risk aversion.

Market Sentiment Turns Bearish After Private Sector Data

Thursday's session saw a noticeable downturn in sentiment after 11 a.m. as traders absorbed stronger-than-expected growth in private sector activity for August.

This unexpected data dented hopes for a larger-than-anticipated 50-basis-point rate cut by the Fed in September. As a result, market-implied probabilities for such a rate cut tumbled to 24%, down sharply from 38% just a day earlier.

This shift in expectations led to a broader market pullback, with traders opting to take profits following a 13% rally in the Nasdaq 100, tracked by the Invesco QQQ Trust (NASDAQ:QQQ), from its early August lows. The day's decline marks the steepest drop for tech stocks since August 5.

Semiconductor, Magnificent 7 Stocks Dragged The Index

Semiconductor stocks were among the hardest hit, with the iShares Semiconductor ETF (NYSE:SOXX) plunging 3.4%, its worst performance since August 2.

Out of the 100 components in the Nasdaq 100, 80 ended the day in the red, indicating a broad-based weak sentiment.

The day's worst performers included Moderna Inc. (NASDAQ:MRNA), down 6.5%, Intel Corp. (NASDAQ:INTC), down 6.1%, and MongoDB Inc. (NASDAQ:MDB), down 5.8%.

When looking at the performance contribution, four of the Magnificent 7 tech giants were significant drags on the Nasdaq 100's performance:

Technical Outlook: Crucial Support Level in Focus

From a technical perspective, the Nasdaq 100 closed the session right at the critical support level provided by its 50-day moving average.

The market's reaction in Friday's session will be crucial in determining whether this support level can hold and potentially trigger a rebound. If the index breaks below this key level, the next support zone lies around the 18,839 mark, coinciding with the 100-day moving average.

• Fed Minutes Reveal 'Plausible Case' For Interest Rate Cut As Policymakers Cheer Inflation Progress

Image created using artificial intelligence via Midjourney.