S&P 500 Pulls Back As Traders Stay Focused On Rising Treasury Yields

Key Insights

• Treasury yields continue to move higher, which is bearish for stocks.

• Existing Home Sales declined, serving as an additional negative catalyst for S&P 500.

• Energy and tech stocks managed to stay in the positive territory despite rising yields.

S&P 500 Remains Under Pressure

S&P 500 faced resistance near 3730 and pulled back towards the 3650 level as traders focused on rising Treasury yields. The yield of 10-year Treasuries tested new highs near the 4.25% level, while the yield of 2-year Treasuries moved above the 4.60% level. Such levels were last seen back in 2007.

Not surprisingly, traders are nervous as they fear that high yields will put too much pressure on the economy.

Existing Home Sales report indicated that Existing Home Sales declined by 1.5% month-over-month in September. Higher interest rates will continue to put pressure on the housing market in the upcoming months.

Tesla was among the biggest losers today as traders reacted to the earnings report that was released yesterday after the market close.

AT&T gained 7% after the companys results beat analyst estimates on both earnings and revenue. AT&T has also raised the full-year 2022 guidance, which was bullish for the stock.

Most market segments have been under pressure today, although energy stocks like Exxon Mobil and Chevron managed to stay in the positive territory despite the pullback in oil markets.

After the market close, the railroad company CSX Corporation released its quarterly report, beating analyst estimates on both earnings and revenue. The report may provide some support to the market as it shows that economic activity remains robust despite recession fears. The stock moved above the $28.50 level in the post-market session.

Snap is not in the S&P 500, but its report may have a material impact on market mood in the tech segment. Snap reported revenue of $1.13 billion and adjusted earnings of $0.08 per share, beating analyst estimates on earnings and missing them on revenue. The company has announced a $500 million buyback, but the market was not satisfied and the stock was down by 24% in the post-market session.

S&P 500 Settled Back Below The 20 EMA

From a big picture point of view, S&P 500 failed to settle above the 20 EMA and may try to gain additional downside momentum in the upcoming trading sessions. The key support level for S&P 500 is located at 3585. In case S&P 500 manages to settle below this level, it will continue its pullback and move towards the 3500 level.

On the upside, S&P 500 needs to settle back above the 20 EMA, which is located near the 3700 level. A move above the 20 EMA will provide S&P 500 with an opportunity to test the highs of the previous rebound near 3800.