S&P 500 Rallies As Treasury Yields Decline

Key Insights

• S&P 500 gained strong upside momentum and moved away from yearly lows. 
• Today’s rally is driven by declining Treasury yields and strong performance of commodity markets. 
• A move above 3660 will push S&P 500 towards the next resistance level at 3700.

S&P 500 Rebounds From Yearly Lows

S&P 500 is currently trying to settle back above the resistance at 3660 amid a global market rebound.

Treasury yields gained strong downside momentum, which was bullish for stocks. The yield of 10-year Treasuries has recently tested the 20 EMA at 3.57%. In case the yield of 10-year Treasuries manages to settle below this level, it will move towards the 3.50% level and provide more support to S&P 500.

Energy stocks enjoy strong support today as WTI oil is up by 4% amid reports that OPEC+ will cut production by more than 1 million bpd. Marathon Oil, Devon Energy, and Apa Corporation are up by 7-8% in today’s trading session.

Basic materials stocks are also moving higher due to the strong rally in commodity markets. The rally in this market segment is broad. Chemicals stocks, including Eastman Chemical, DuPont, and Celanese Corporation are up by 4-5%. The leading copper producer Freeport-McMoran and steel company Nucor Corporation are up by 6%.

The biggest loser in S&P 500 is Tesla, which is down by more than 8% as the company missed delivery estimates. Tesla reported that it produced 365,923 vehicles and delivered 343,830 vehicles.

S&P 500 Tests Resistance At 3660

S&P 500 managed to gain strong upside momentum and moved towards the resistance level at 3660. In case S&P 500 manages to settle above this level, it will head towards the next resistance at 3700. RSI is in the mderate territory, so there is plenty of room to gain additional momentum in case the right catalysts emerge.

In case S&P 500 settles above 3700, it will head towards the resistance at 3725. A successful test of this level will push S&P 500 towards the 3750 level.

On the support side, the previous resistance at 3635 will serve as the first support for S&P 500. If S&P 500 gets back below this level, it will head towards the next support at 3600. A move below the support at 3600 will push S&P 500 towards the support level at 3580.

For a look at all of today’s economic events, check out our economic calendar.