US Stocks Struggle Amid Rising Bond Yields

On Monday, US stocks continued their downward trend, extending losses from the previous week. This decline was driven by concerns among investors about rising bond yields and the possibility of enduring higher interest rates. The upward trajectory of Treasury yields remained a focal point for investors, who were eagerly awaiting economic data and statements from Federal Reserve policymakers later in the week to gain insight into the future direction of interest rates.

The S&P 500 saw a modest rebound on Monday after suffering its most significant weekly decline since March in the previous week, driven by Amazon (NASDAQ:AMZN) and gains in energy stocks. Among the S&P 500 sectors, energy led the way with a 1.3% increase, while materials gained 0.8%. Defensive sectors, such as consumer staples, lagged behind, dropping 0.4%.

Despite this, September was shaping up to be the worst month for the S&P 500 in 2023. This indicated that the benchmark index was headed for its second consecutive losing month and the most substantial monthly decline of the year. Despite the recent decline, the S&P 500 was still up by approximately 13% for the year, even though it had slid about 5.5% since late July.

As the third quarter neared its end, investors anticipated that market movements might remain relatively subdued until companies reported their quarterly results in the coming weeks.

In the midst of these market fluctuations, energy stocks managed to rise, providing support to the broader market. Meanwhile, oil prices experienced some turbulence as investors evaluated the potential impact of prolonged high interest rates on both the economy and energy demand.

Another pressing concern on investors' minds was the looming possibility of a U.S. government shutdown. As of the report, Congress had not yet passed the necessary spending bills to fund the government beyond October 1st. Credit rating agency Moody's issued a stern warning, stating that while a U.S. shutdown would negatively affect the nation's creditworthiness, the economic impact would likely be short-lived. Moody's analyst William Foster noted that a possible shutdown would highlight how political polarization in Washington is jeopardizing fiscal policymaking, especially with the growing pressure on the affordability of U.S. government debt due to rising interest rates.

Investor anxiety had been steadily increasing since the Federal Reserve's recent warning that interest rates could remain elevated for an extended period, leading to a surge in bond yields. The 10-year Treasury yield reached its highest level since 2007 and continued to rise, reaching 4.527% on Monday. Similarly, the two-year Treasury yield hit its highest point since 2006 last week, reaching 5.129%. Market observers were closely watching for remarks from Federal Reserve speakers and key economic reports, including inflation data, which would influence the Fed's monetary policy decisions.

The week's calendar included various appearances by Fed officials and the release of important economic data. Fed Chair Jerome Powell was scheduled to speak on Thursday, and New York Fed President Williams on Friday. Investors would be closely monitoring data on durable goods, the personal consumption expenditure price index for August and second-quarter Gross Domestic Product. Hence, it might impact the broader US stock market, potentially leading to an overall upward correction. During this timeframe, the market is foreseen to face ongoing pressure while maintaining stability and making continuous adjustments within the established range.

Data for Technical Analysis (5H) CFD US 500 [S&P 500]

Resistance : 4337.5, 4341.8, 4348.9

Support : 4323.3, 4319.0, 4311.9                         

5H Outlook

Source: Investing.com       

Buy/Long 1 If the support at the price range 4313.3 - 4323.3 is touched, but the support at 4323.3 cannot be broken, the TP may be set around 4337.5 and the SL around 4308.0, or up to the risk appetite.

Buy/Long 2 If the resistance can be broken at the price range of 4337.5 - 4347.5, TP may be set around 4353.0 and SL around 4318.0, or up to the risk appetite.       

Sell/Short 1 If the resistance at the price range 4337.5 - 4347.5 is touched, but the resistance at 4337.5 cannot be broken, the TP may be set around 4318.5 and the SL around 4352.0, or up to the risk appetite.

Sell/Short 2 If the support can be broken at the price range of 4313.3 - 4323.3, TP may be set around 4305.0 and SL around 4343.0, or up to the risk appetite.       

Pivot Points Sep 26, 2023 02:42AM GMT