Rising Treasury Yields Rally: Major Stocks Below Buy Points

Rising Treasury Yields Rally: Major Stocks Below Buy Points

Dow Jones futures indicate minimal changes, with S&P 500 futures edging lower and Nasdaq 100 futures experiencing a 0.1% drop. Amid higher yields, homebuilders and cyclical housing stocks took a hit on Tuesday. This downtrend erased some of their previous gains despite increased rates. In contrast, energy stocks continued to perform well, thanks to the ongoing rise in crude oil prices.

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Microsoft (MSFT), Meta, Tesla, General Electric (GE), and MongoDB (MDB) are all hovering close to buy points, making them focal points of interest for traders.

Dow Jones futures saw minimal changes overnight, mirroring the steady performance of S&P 500 futures and Nasdaq futures. Despite a lack of significant losses in major indexes, the market rally experienced a dent. Treasury yields surged on Tuesday. Although megacap stocks like Microsoft (MSFT), Meta Platforms (META), and Tesla (TSLA) helped limit the damage, a lacklustre market breadth became evident. The Dow Jones and Russell 2000 both slipped below their 50-day moving averages.

META stock is an IBD Leaderboard member, while Microsoft stock is part of the IBD Long-Term Leaders list. MDB stock and Zscaler are included in the IBD 50.

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Post-market close, software companies Asana (ASAN) and Zscaler (ZS), along with the software development platform GitLab (GTLB), released their earnings reports. ZS stock, despite better-than-expected earnings and strong guidance, saw a slight drop in after-hours trading. Zscaler stock has formed a consolidation pattern, with potential entry points at around 162.67 or 164.29. On Tuesday, ZS stock had risen by 275.00% to reach 162.74.

ASAN stock also saw a modest decline in extended trading following positive earnings. The work management software maker has a potential buy point at 26.27 in a consolidation pattern and an early entry option above 23 using a trendline approach. Asana stock closed at 21.64 on Tuesday, just below the 50-day moving average. Asana’s earnings results could influence peers like Smartsheet (SMAR) and Monday.com (MNDY), with SMAR reporting on Thursday.

GTLB stock, on the other hand, showed a strong increase in overnight trading after reporting unexpected earnings and revenue figures that exceeded expectations. GTLB shares rose by 1.20% to 49.74 on Tuesday. The stock features a buy point at 54.60, originating from a cup base formation within a larger consolidation pattern.

Stock Market Rally Analysis

The stock market rally faced a minor setback on Tuesday due to a rise in Treasury yields. Despite this development, the Nasdaq, in particular, displayed resilience against selling pressure.

In Tuesday’s stock market trading, the Dow Jones Industrial Average fell by 0.60%, while the S&P 500 index declined by 0.40%. Notably, Tesla (TSLA) stock performed exceptionally well, limiting losses. The Nasdaq composite only dipped by 0.10%, showing resistance against the market trend. However, the small-cap Russell 2000 experienced a significant decline, tumbling by 2.10%.

Meanwhile, crude oil prices in the United States continued to surge, climbing by 1.30% to reach $88.69 per barrel. This increase came after Saudi Arabia’s announcement of extending its voluntary production cut of 1 million barrels per day until the end of the year, a move matched by Russia’s decision to maintain its own output curbs. Crude futures have enjoyed a robust 9.90% increase during an eight-session winning streak.

Furthermore, the 10-year Treasury yield saw a 9 basis point jump, reaching 4.27%. This rise followed a similar increase on Friday. In light of this situation and the weak economic data from China and Europe, the U.S. Dollar had a strong performance.

Market Rally Today: Stocks Close Lower on Downbeat Economic Data

Market participants face downbeat economic data, rising Treasury yields, and increased crude oil prices.

As market participants returned from a lengthy holiday weekend, they were greeted by disappointing economic data, higher Treasury yields, and elevated crude oil prices.

Overseas, economic data set the tone early in the session. China reported its slowest growth rate in services activity in eight months, while a European survey indicated a steeper-than-expected decline in business activity within the eurozone. Additionally, crude oil prices rose as Saudi Arabia and Russia jointly extended their voluntary supply cuts, raising concerns about global growth.

The United States also reported discouraging economic news, with the Commerce Department revealing a 2.10% drop in U.S. factory orders for July. This marked the first decline in orders for U.S. manufactured goods after four consecutive months of increases, albeit slightly better than economists’ forecasts of a 2.30% decline.