Under the hood, the Nasdaq is sputtering

Under the surface, market internals have also been deteriorating. The Nasdaq New High/New Low (NH/NL) Index, a widely watched measure of breadth, ended Thursday at 49.4%, its lowest level since April 13.

The weakness in this indicator has been developing for some time. After the Nasdaq's March 30 low, the NH/NL Index rallied to a peak in late April. But while the Composite went on to post fresh record highs, the breadth measure failed to confirm the move, instead recording a lower high.

That divergence suggested participation in the rally was narrowing even as the index continued climbing. Now, with the NH/NL Index falling to a three-month low, the decline appears to be broadening across the market. In other words, fewer stocks are providing support, leaving the Nasdaq more vulnerable to additional downside.

For perspective, the NH/NL Index bottomed between 29.7% and 35.0% during late-2025 pullbacks, while the late-March 2026 low came in at 17.6%.

The key question now is whether the indicator can stabilize and reverse higher. Historically, the NH/NL Index has tended to form V-bottom reversals around significant Nasdaq lows. Bulls will therefore want to see it reclaim its declining 10-day moving average, which stood at 56.4% on Thursday.

A move back above that level would suggest market breadth is improving and could strengthen the case that the recent Nasdaq pullback is losing momentum, giving bulls a firmer footing.

Since posting a record close on June 2, the Nasdaq Composite .IXIC has been showing signs of fatigue.

Much of the pressure has come from the chip sector. The PHLX Semiconductor Index .SOX is now flirting with bear-market territory, weighing on the broader tech-heavy benchmark. By Thursday's close, the Nasdaq had fallen about 1.5% to 25,881.95, leaving it 4.5% below its June 2 record finish of 27,093.90 and 4.8% beneath its June 1 all-time intraday high of 27,190.21.