Tech sector breaks uptrend, raising risk of further S&P 500 losses

The technology sector came under renewed pressure on Wednesday, with the Technology Select Sector SPDR Fund (XLK) breaking below its uptrend on a closing basis, prompting analyst Michael Kramer to warn of potential further losses.

“It was not a good day for technology stocks,” Kramer wrote on X on Wednesday, adding that the break below the trendline suggested further downside could lie ahead, with the ETF’s next support area around $183.

Kramer, founder of Mott Capital Management, said weakness in technology stocks could pose a broader risk to the market. “If the S&P 500 loses the support of the technology sector, we are likely to face a much rougher road ahead,” he wrote, arguing that the group had been the main reason the broader index had held together despite weakness in equal-weighted stocks and small caps.

The chart showed XLK falling 2.93% to $190.53 on Wednesday, below the rising trendline drawn from its late-July low. The ETF had climbed sharply from its spring lows before consolidating through the summer and advancing toward a peak above $200 in early October. Wednesday’s decline took it below the trendline that had supported the latest leg of that advance.

The warning came as technology shares faced renewed selling pressure. The Nasdaq Composite and Nasdaq-100 both fell 2% on Wednesday as growth stocks weakened following the latest consumer price inflation report.

Nasdaq futures were also lower on Thursday, while South Korea’s market fell 8.34% to around 5,540, extending its losing streak to seven sessions and reaching its lowest level since late July, amid concerns over AI valuations and financing costs.