Nasdaq Index: Rising Bond Yields Threaten Nasdaq Uptrend as Memory Stocks Sink

The Bond Market Finally Got the Stock Market’s Attention

The S&P 500 is lower Tuesday and the Nasdaq is taking the real hit. The 30-year Treasury yield reached a fresh 19-year high and it is not just the United States. Japan, Germany and France all pushed long-bond yields to multiyear or multidecade highs the same session. This is a global bond market demanding more yield, and the stock market spent months looking the other way.

Monday’s memory stock leaders are reversing hard. The AI shortage story has not changed. The cost of owning it while long yields sit at these levels has. The Nasdaq minor trend shifted to down at mid-session and the Nasdaq-100 futures are testing the 50-day moving average.

The Dow Jones Industrial Average is near flat. The S&P 500 Index is off 0.68%. The Nasdaq Composite is down 1.77%.

Long Yields Are Rising Everywhere and the Front End Cannot Fix It

The 30-year Treasury yield eased to 5.305% after reaching a new 19-year high. The 10-year held near 4.72%. The two-year stayed around 4.175%. U.S. import prices fell 0.4% in July when the market expected a 0.1% increase, giving the front end another reason to price a September hold.

The long end is ignoring all of it. Treasury buyers are demanding more compensation to own decades of government debt while inflation sits above target, fiscal deficits are running hot and corporations are issuing long-term paper to fund AI infrastructure. The curve is steepening because the problems at the long end have nothing to do with whether the Fed raises rates next month.

Ed Yardeni, the strategist who coined the term Bond Vigilantes, is watching the 10-year. It is near 4.72%, not 5%. That distinction matters. The 30-year above 5.3% is already pressuring growth stocks. A 10-year moving toward 5% raises the hurdle for every company in the market that depends on financing.

Monday’s Memory Leaders Are Tuesday’s Biggest Losers

The semiconductor pullback is broad. Western Digital fell more than 7%. Sandisk dropped more than 8%. Marvell and Seagate were each off more than 8%. The group rallied Monday after Washington pushed Apple away from Chinese memory chips during the DRAM and NAND shortage. Tuesday’s reversal shows how fast traders take profits when the bond market turns hostile.

The AI demand has not disappeared. The memory shortage has not disappeared. The market is repricing what it costs to hold growth names while long yields are at multidecade highs. Monday’s Lutnick headline was enough to buy the group for a session. It was not enough to hold it through a global bond selloff.

Crude Above $85 Keeps Giving Bond Sellers More to Work With

WTI crude rose nearly 1% Tuesday to trade above $85 per barrel. Brent remains near $91. President Trump said there are no current talks or scheduled discussions with Iran. The naval blockade remains in effect and Iran has threatened a more offensive posture if diplomacy fails. The Strait of Hormuz is still restricted.

The stock market rallied when the July inflation reports took September hike odds lower. Crude staying elevated can put those odds back in play before the Fed meets. That is the link between the Middle East and the selling in growth stocks. Higher fuel costs feed into the next inflation report and give the long end of the curve another reason to hold at these levels.

Stocks in the News

Home Depot gained 1.5% after beating on earnings and revenue and reaffirming full-year guidance. The stock is the reason the Dow is near flat while the Nasdaq sells off.

Daily Nasdaq Composite Index (IXIC) Technical Analysis

The Nasdaq Composite Index is down for a third session on Tuesday after gapping below a short-term pivot at 26541.98, which is new resistance. The selling also took out a minor swing bottom at 26372.31, changing the minor trend to down and shifting momentum to the downside. The next target is another minor bottom at 26208.43. A trade through this level could intensify the selling pressure, leaving the 50-day moving average at 25914.87 as the next target.

Watch for a technical bounce on the first test of the 50-day MA. If it fails then the next target area will be the 50% to 61.8% retracement zone at 25650.43 to 25361.31.

Daily September E-mini Nasdaq-100 Index Futures Technical Analysis

September E-mini Nasdaq-100 Index futures are sharply lower at the mid-session on Tuesday. The sharp break has driven the index all the way down to the 50-day moving average at 29513.17. Today’s intraday low stopped short of the moving average as buyers came in early at 29514.00. This is the usual reaction to an index in an uptrend.

Losses could extend further if the 50-day MA fails as support. This move could trigger an acceleration into a minor bottom at 29241.25 and a long-term 50% level at 29150.75.

The short-term range is 27201.50 to 30343.00. If 29150.75 fails as support then look for a break into the short-term retracement zone at 28772.25 to 28401.50.

What to Watch

The bond market is the driver. The 30-year above 5.3% is already doing the damage and Yardeni’s 10-year line near 5% is the next threshold that changes the conversation for every growth stock in the market. Oil above $85 WTI and $91 Brent keeps feeding the long-end selloff with fresh inflation risk. The FOMC minutes arrive Wednesday, but the front end has already repriced September. The long end is the side that matters and it is not listening to softer data.

The Nasdaq gapped below a key pivot and the minor trend is down. The Nasdaq-100 futures found buyers right at the 50-day moving average. That is the level that separates a pullback from something more serious. If it holds, the selloff is a repricing. If it breaks, the market has to find its next floor with long yields still climbing.

More Information in our Economic Calendar.