AI Wobble Leaves US 100 Sentiment on a Knife Edge
Its already been a tough start to the week for technology stocks in the US 100 index as traders reacted negatively on Monday to the shock proposal made over the weekend by influential Anthropic CEO Dario Amodei, who urged the AI industry to slow the development of its most advanced models in order for adequate guardrails to be put in place, comments further supported by Sam Altman of OpenAI and Elon Musk.
The fallout saw chipmaker stocks within the US 100, leading the index down from a close at 29370 on Friday to a low of 28804 yesterday afternoon, a drop of 1.9% before some fresh demand resurfaced. Chipmakers were hit especially hard on concerns that a slowdown in AI development could lead to a reuction in AI capital expenditure which has been the major factor driving their value to numerous record highs.
If this wasn’t enough of a challenge for stock traders to negotiate this week, sentiment remains on a knife edge ahead of the Federal Reserve (Fed) interest rate decision, which is due for release on Wednesday at 1900 BST. Economists and investors are divided on whether the Fed decides to hike rates for the first time in 2026 to stem the immediate threat from rising inflation or keep rates unchanged to allow policymakers to analyse another month of key data readings. As a rule, Fed rate hikes tend to weigh on technology/growth stocks in the US 100 index as it makes borrowing more expensive.
Whatever the Fed decides, the press conference, which commences at 1930 BST on Wednesday, could also be a volatility flashpoint for US 100 prices, as traders respond to Fed Chair Kevin Warsh’s comments on inflation and future rate moves into the end of 2026.
Technical Update: Decision Making Process Develops:
The technical picture for the US 100 index continues to reflect an uncertain sentiment backdrop, with the latest upside recovery failing at 30246 (August 17th high), still well below the June 1st all-time high at 30656. Some traders may view this price action as a weak test of the previous 30656 extreme, which could be a negative for future directional moves.
https://www.tradingview.com/x/rH3YO4dj/
However, as the chart above shows, since mid‑August prices have traced out a period of sideways movement between 28873 (August 24th low) and 29749 (August 28th high). This type of more balanced activity may be viewed as a decision‑making process, with a closing breakout from the price range required to suggest where the next directional risks could lie.
Potential Support Levels:
With 28873 (August 24th low) potentially marking the lower extreme of the current sideways trading range, this level may be viewed as the first key support. Closing breaks below 28873, if seen, could develop the possibility of negative momentum reemerging.
https://www.tradingview.com/x/rH3YO4dj/
Closing breaks below 28873 could suggest the decision‑making process has been resolved to the downside, resulting in further price weakness and tests of support at 27050 (July 29th low). Closing breaks below 27050 could open potential for moves toward 26714 (50% Fibonacci retracement of the March 31st to June 1st strength), even 25830 (61.8% retracement).
Potential Resistance Levels:
Currently the sideways price range still remains intact, with the upper extremes potentially marked by resistance at 29749 (August 28th high). Therefore, if this sideways activity is to be resolved in a positive way, it may be reflected by closes above 29749, which could lead to further attempts at price strength.
https://www.tradingview.com/x/rH3YO4dj/
Closes above 29749, if seen, could lead to further price upside momentum to challenge the August 17th high at 30246. If this level were also broken on a closing basis, price moves could extend toward the June 1st all‑time high at 30656.
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TITradingView Ideas15 Sept
The Guardian•Shakeel Hashim16 Sept
