Treasury yields pulled back as high yields have finally attracted investor interest. The yield of 2-year Treasuries declined below the 4.75% level, while the yield of 10-year Treasuries settled below 5.23%. The market has mostly ignored falling Treasury yields as traders focused on AI stocks.
Oil prices rallied as traders prepared for potential escalation in the Middle East. President Trump said that U.S. would not attack Iran before midterm elections. The market sees it as a signal that U.S. could restart the military operation against Iran after midterm elections. Such an operation would disrupt supply at a time when global oil reserves continue to fall.
Energy stocks were among the biggest gainers today as traders focused on the rally in the oil markets. Consumer defensive and real estate stocks have also gained ground amid rising demand for defensive sectors. Tech stocks found themselves under strong pressure as traders worried about Open AI’s performance.
If SP500 settles below the 50 MA at 7739, it will get to the test of the support level at 7720 – 7730. A successful test of the support at 7720 – 7730 will open the way to the test of the next support at 7615 – 7625. RSI is in the moderate territory, so there is plenty of room to gain momentum in the near term.