S&P 500 Index: Lower Yields Bring Relief but Semiconductor Sellers Stay Active

Bessent’s Buyback Firepower Puts the Long Bond Back in Play

U.S. stock futures trimmed their early losses Monday after a report said Treasury Secretary Bessent may have more firepower to push long-term yields lower. The bond market responded first. Technology did not follow.

The Nasdaq-100 is still leading the decline and chip stocks are taking the hardest hits after losing 5.5% last week. The 10-year yield dropped 4 basis points to 4.70% and the 30-year fell 4 basis points to 5.23%, but the relief has not reached the names that need it most.

Nvidia reports Wednesday after the close and Warsh speaks Friday at Jackson Hole. The market is sitting above a support cluster on the S&P 500 and traders are buying the dip, not chasing offers.

S&P 500 futures were down about 0.20% after trimming a deeper loss. Nasdaq-100 futures fell 0.54%. Dow futures were off 30 points, or 0.05%.

Treasury’s General Account Changes the Buyback Conversation

CNBC reported Monday that Treasury could tap its General Account to fund the expanded long-end buybacks. The balance sits at roughly $950 billion, well above the prior $550 billion to $600 billion target. Bessent does not need to sell more bills to pay for it.

Treasury surprised the market last week when it said it would at least double long-end buybacks of older bonds from $2 billion to $4 billion per operation. Bessent said the purchases could be larger. The first announcement pushed yields lower for one session, but the relief faded fast. The General Account report is why futures recovered Monday morning.

The 30-year yield moved above 5.30% last week, reaching levels not seen in nearly 20 years. Japan, France and Germany also saw yields push to multi-year highs. The bond market has been the stock market’s problem. Monday’s report gave it a reason to pause.

Chip Stocks Are Still Taking the Rate Trade on the Chin

The semiconductor ETF dropped almost 2% Monday morning on top of last week’s 5.5% decline. Marvell, AMD, Intel, Western Digital, Seagate and Micron were all lower. The memory names got hit the hardest. The Technology Select Sector ETF was down nearly 1%, and the lower-yield report helped the broad market recover but did nothing for the group that has been leading the selling since yields started climbing.

Nvidia and Marvell Earnings Test Whether the AI Trade Can Hold

Nvidia reports after Wednesday’s close. Wall Street expects earnings of $2.09 per share on revenue of $92.07 billion, which would represent 99% earnings growth and 97% revenue growth from a year ago. Bloomberg reported over the weekend that Nvidia told customers its Vera Rubin and Blackwell servers could see price increases of more than 15%. The pricing power matters, but the guidance is what the semiconductor trade is waiting for.

Marvell follows Thursday after the close. Analysts expect earnings of $0.93 per share on revenue of $2.71 billion.

Daily September E-mini S&P 500 Index Futures Technical Analysis

September E-mini S&P 500 Index futures are edging lower early Monday as traders try for a second session to build a support base in front of last week’s low at 7657.75. Ironically, the market has been straddling the former all-time high at 7693.75 that it reached in June before selling off to 7292.25.

The main trend is up according to the daily swing chart. A trade through 7324.00 will change the main trend to down. A move through 7838.50 will reaffirm the uptrend.

The minor trend is down. This is controlling the current downside momentum. The new minor range is 7838.50 to 7657.75. Overtaking its pivot at 7748.13 will shift momentum to the upside.

If sellers can press the futures index through 7657.75 then look for the selling to possibly extend into the 50-day moving average at 7587.85, followed by the intermediate 50% level at 7581.25.

Stocks in the News

Alibaba was lower after announcing a $10.2 billion share sale to non-U.S. investors to fund AI infrastructure.

Nucor and Steel Dynamics gained after U.S.-Canada trade talks collapsed Friday. Canada is expected to target the U.S. steel industry with retaliatory tariffs beginning September 8.

Robinhood and Coinbase slipped after Bitcoin stalled near $77,000 following a 22% gain over the prior three sessions.

PCE and Jackson Hole Close the Week

The bond market got its relief Monday morning. PCE Wednesday decides whether it gets to keep it. The inflation number arrives with income, spending, and a GDP revision attached, and the market is already positioned around the question of whether Treasury’s buying power can hold yields down. A hot PCE takes that answer away from Bessent and hands it back to the Fed.

Warsh speaks Friday at Jackson Hole. He has not tipped his hand on rates and he does not need to announce a move to move stocks. His read on inflation and long-term yields is enough with the 30-year still near 5.25% and the Nasdaq already under pressure.

What to Watch

The immediate trade is the 10-year and 30-year yields. The General Account report gave stocks relief Monday morning, but the market needs proof that the bond buying can keep yields from rebuilding higher. PCE Wednesday sets the first macro direction. Nvidia and Marvell then test the AI spending story. Warsh has the final word Friday. The week started with the bond market. It will end with the Fed chair deciding whether that relief holds.

The support cluster at 7587.85 to 7581.25 on the S&P 500 is the floor underneath the market if sellers can press through last week’s low at 7657.75.

More Information in our Economic Calendar.