Stocks continue to move lower as traders rush out of riskier assets.
S&P 500 lost momentum and moved to new lows as traders continued to move out of riskier assets.
The yield of 10-year Treasuries tested new highs near 3.98%. The U.S. dollar also gained upside momentum and moved closer to yesterday’s highs. Strong dollar is bearish for stocks as it hurts profits of international companies and makes stocks less attractive for foreign investors.
Consumer stocks like Estee Lauder, Philip Morris, and Keurig Dr Pepper are among the biggest losers today.
Real estate stocks are also moving lower, which is not surprising as Treasury yields are testing new highs. REITs typically have significant debt levels, so they are sensitive to changes in yields.
Energy stocks gain ground in today’s trading session as WTI oil rebounds from recent lows. Valero Energy, Marathon Petroleum, and Baker Hughes are up by more than 2%.
From a big picture point of view, the market remains nervous. Today, S&P 500 made an attempt to gain upside momentum but faced strong resistance, which shows that traders are ready to use upside moves as an opportunity to sell stocks.
At this point, it looks that the market will continue to move lower if the U.S. dollar keeps testing new highs. The dynamics of the U.S. dollar will likely serve as the key catalyst in the near term. Stocks will have a chance to rebound when the American currency pulls back from highs,
The technical picture for S&P 500 remains bearish. While RSI is in the oversold territory, S&P 500 managed to settle below the support level at 3660 and is testing the next support at 3635.
This is an important support level as S&P 500 failed to settle below 3635 back in June. If S&P 500 declines below this level, it may quickly move towards the next support level at 3600.
For a look at all of today’s economic events, check out our economic calendar.
Vladimir is an independent trader and analyst with over 10 years of experience in the financial markets. He is a specialist in stocks, futures, Forex, indices, and commodities areas using long-term positional trading and swing trading.