S&P 500 and NASDAQ Rise as Tech Demand Overrides Yield Concerns

The S&P 500 index is advancing, with traders brushing off concerns about rising Treasury yields. Instead, they are focusing on strong demand for tech stocks. The yield on 2-year Treasuries tested 4.85%, while the 10-year yield moved above 5.30%, and the 30-year yield attempted to settle above 5.70%. Despite these movements, the FedWatch Tool indicates that traders do not expect a rate hike at the next meeting in October, with the probability of a hike currently at 23.8%.

Oil prices dipped as Saudi Aramco reduced prices for Asian buyers, signaling continued oil flow through the Strait of Hormuz and a push for market share. This drop in oil prices provided some support to the S&P 500. Additionally, the ISM Services PMI report showed a slight decline from 55.4 in August to 54.9, missing expectations but still indicating expansion in the services sector.

The NASDAQ index is testing new highs, driven by strong demand for tech stocks. Traders are overlooking risks from rising yields, focusing instead on the potential of AI technology. Western Digital surged by 6%, making it one of the biggest gainers in the NASDAQ index. The index moved above resistance at 30,750-30,800 and climbed above the 31,000 level, with potential to reach 31,500 if it stays above 31,000.

The Dow Jones index also gained ground amid a broader rally in the equity markets. NVIDIA and Microsoft led the charge, benefiting from strong demand for tech stocks. From a technical standpoint, the Dow Jones moved above the resistance level at 51,100-51,200 and is attempting to settle above the 50 MA at 51,302. If it succeeds, the next resistance level is at 51,600-51,700. On the downside, settling below 51,000 could push the index towards support at 50,300-50,400.