The major US stock indices opened higher, but the gains faded as Treasury yields moved up. The 10-year yield is now up 5 basis points at 5.212%, putting renewed pressure on stocks.
The economic data offered a mixed message. Headline durable goods orders were virtually unchanged in August, although orders excluding transportation rose 0.3%, pointing to some underlying strength. The University of Michigan sentiment readings also came in above estimates, but one-year inflation expectations remained elevated at 4.6%, up from 4.0% last month. For stock traders, that combination matters: signs of growth are welcome, but persistent inflation can keep yields higher.
In the video above, I look at the technical picture for:
- The S&P 500
- The Nasdaq Composite
- The Nasdaq 100
Each index tested a key support target yesterday. In each case, buyers stepped in near that level, lifting prices off their lows and leaving the indices close to unchanged at the finish. That was a good response from the buyers, but those support levels remain in play today.
The question now is whether buyers can defend them again as yields rise. Hold above support, and yesterday’s rebound has room to build. Break below and stay below, and the sellers take back more control.
This article was written by Greg Michalowski at investinglive.com.