SP500 Rebounds From Session Lows
SP500 rebounded from session lows as traders used the pullback to buy stocks despite rising Treasury yields and higher oil prices.
Treasury yields tested new highs as bond traders worried about hawkish Fed. According to FedWatch Tool, traders expect that Fed will raise the federal funds rate by 50 bps by the end of the year.
The yield of 10-year Treasuries climbed towards the 5.18% level, while the yield of 30-year Treasuries settled near 5.47%. I’d note that yields on long-dated bonds test multi-decade highs despite Bessent’s buybacks, which indicates that the bond market is extremely bearish. However, the strong sell-off in bond markets did not put material pressure on SP500 today.
Oil prices rallied as Houthis attacked Saudi Arabia. Iran said that the Strait of Hormuz would remain blocked until U.S. lifted sanctions and discontinued the naval blockade of Iranian ports. Brent oil climbed above the $107.00 level as traders reacted to recent developments in the Middle East.
Today, traders also had a chance to take a look at the Initial Jobless Claims report. The report indicated that 197,000 Americans filed for unemployment benefits in a week, compared to analyst forecast of 201,000.
New Home Sales increased by +6.4% month-over-month in August, compared to analyst forecast of +3.2%. It remains to be seen whether New Home Sales will continue to grow amid rising interest rates.
Communication services and healthcare stocks were among the biggest gainers in the SP500 index today. Basic materials stocks found themselves under pressure as precious metals pulled back. Utilities stocks moved lower as traders focused on rising Treasury yields.
Currently, SP500 is trying to settle above the resistance level at 7720 – 7730. In case this attempt is successful, SP500 will head towards the next resistance level, which is located in the 7815 – 7825 range. RSI is in the moderate territory, so there is plenty of room to gain momentum in the near term.
NASDAQ Attempts To Settle Back Above 30,500
NASDAQ has also moved away from session lows as traders bought the dip. Meta, which was up by +4.7%, was among the biggest gainers in the NASDAQ index today.
In case NASDAQ settles above the 30,500 level, it will head towards the resistance level at 30,750 – 30,800. On the support side, NASDAQ needs to settle below the 30,200 level to gain additional downside momentum in the near term. In this case, NASDAQ will head towards the next support at 29,850 – 29,900.
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See all Dow Jones forecastsDow Jones Tests New Lows
Dow Jones is losing ground amid falling demand for consumer and industrials stocks. Walmart, which is down by -2.2%, is among the worst performers in the Dow Jones index today.
Currently, Dow Jones is trying to settle below the support level at 51,100 – 51,200. In case this attempt is successful, Dow Jones will head towards the next support level, which is located in the 50,300 – 50,400 range. On the upside, a move above the resistance at 51,600 – 51,700 will open the way to the test of the 50 MA at 51,853.
For a look at all of today’s economic events, check out our economic calendar.
