Treasury Yields Pressure Equities
Investors couldn’t ignore the elephant in the room: the U.S. 10-year Treasury yield spiked more than 7 basis points, crossing the 4.9% threshold for the first time since 2007. This uptick applies significant pressure on equities, especially growth-oriented tech stocks, as higher yields could dampen borrowing and investment.
Chipmakers on Shaky Ground
Adding to the market’s unease, chipmakers like Nvidia and Advanced Micro Devices faced losses for a second consecutive day following the U.S. government’s tightening of export restrictions on AI chips to China. This geopolitical strain is injecting further volatility into the technology sector.
Short-Term Forecast: Bearish
Investors are bracing for more volatility as earnings season unfolds and Treasury yields climb. Tech giants Tesla and Netflix report after the closing bell.
A Bank of America survey shows investors turning bearish, with cash levels rising to 5.3% from 4.9% last month. Given the mixed earnings reports and rising yields, the short-term outlook leans bearish.
Technical Analysis
The current daily price of the Nasdaq 100 Index stands at 15019.91, closely aligning with its 50-day moving average of 15049.93. This suggests the index is neither significantly overextended nor undervalued in the short term.
However, when we look at the 200-day moving average of 13806.86, the index is trading considerably above this level, indicating a strong bullish trend over a longer time frame.
The proximity of the current price to the 50-day moving average combined with its distance from the 200-day moving average suggests the prevailing market sentiment is cautiously bullish.
Trader reaction to the 50-day moving average sets the tone.
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