SP500 Moves Higher As Traders Shrug Off Worries About Rising Yields
SP500 gains ground as traders ignore rising Treasury yields and focus on strong demand for tech stocks.
The yield of 2-year Treasuries tested the 4.85% level as the bond market sell-off continued. The yield of 10-year Treasuries moved above the 5.30% level, while the yield of 30-year Treasuries made an attempt to settle above 5.70%. Interestingly, FedWatch Tool indicates that traders do not expect Fed to raise rates at the next meeting in October. The probability of a rate hike is currently estimated at 23.8%.
Oil prices pulled back as Saudi Aramco cut prices for Asian buyers. This move showed that oil was flowing through the Strait of Hormuz, and Saudi Aramco prepared to fight for market share. Lower oil prices provided support to SP500 today.
Traders also focused on the ISM Services PMI report. The report showed that ISM Services PMI declined from 55.4 in August to 54.9, compared to analyst consensus of 55. Numbers above 50 show expansion. The report missed expectations but highlighted the strength of the services sector.
Energy stocks were among the gainers today despite the pullback in the oil markets. Basic material stocks have also managed to gain strong upside momentum. Real estate stocks pulled back amid rising Treasury yields.
SP500 settled above the previous resistance at 7720 – 7730 and is heading towards the 7800 level. A move above 7800 will push SP500 towards the resistance at 7815 – 7825. RSI is close to the overbought territory, but there is enough room to gain additional upside momentum in case the right catalysts emerge.
NASDAQ Rallies As Traders Buy Tech Stocks
NASDAQ tested new highs amid strong demand for tech stocks. Traders ignore risks posed by rising yields and focus on the potential of AI technology. Western Digital, which is up by 6%, is among the biggest gainers in the NASDAQ index today.
NASDAQ moved above the resistance at 30,750 – 30,800 and climbed above the 31,000 level. In case NASDAQ stays above 31,000, it will head towards the 31,500 level. On the support side, a move below the 30,750 level will push NASDAQ towards the 50 MA at 30,562. If NASDAQ pulls back below the 50 MA, it will head towards the support level at 30,200 – 30,250.
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See all Dow Jones forecastsDow Jones Moves Away From Multi-Week Lows
Dow Jones managed to gain some ground amid broad rally in the equity markets. NVIDIA and Microsoft were among the best performers in the Dow Jones index today. The stocks gained upside momentum amid strong demand for shares of tech companies.
From the technical point of view, Dow Jones moved above the resistance level at 51,100 – 51,200 and is trying to settle above the 50 MA at 51,302. If Dow Jones manages to settle above the 50 MA, it will head towards the next resistance level, which is located in the 51,600 – 51,700 range.
On the support side, Dow Jones needs to settle back below the 51,000 level to have a chance to gain downside momentum in the near term. In this case, Dow Jones will head towards the support at 50,300 – 50,400.
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