Global bond yields surged on inflation worries Tuesday, dragging Dow Jones and S&P 500 futures lower, while a broken bear flag on the S&P 500 futures chart put the 7,600-7,620 zone back in focus. The pullback came alongside rising oil prices and a jump in the U.S. 10-year Treasury yield to a 20-month high.
Dow Jones Industrial Average futures shed 240 points, or 0.5%, on Tuesday as rising bond yields around the world rattled investors on the first trading day of September. S&P 500 futures fell 0.5% as well, while Nasdaq-100 futures pulled back by nearly 1%.
Bond yields and oil prices weigh on futures
The U.S. 10-year Treasury note yield climbed to a 20-month high, rising 3 basis points to 4.7880%, as renewed Middle East hostilities stoked inflation concerns. Tech stocks fell broadly, with Nvidia, AMD and Micron each down more than 1%.
U.S. oil prices rose more than 2% to $87.81 per barrel, while Brent crude futures gained 1.8% to trade at $92.15. According to Goldman Sachs traders: "the market is exhibiting signs of nervousness across myriad of indicators", pointing to new sentiment survey data.
S&P 500 futures test key support after bear flag breaks
S&P 500 futures broke below an upward-sloping consolidation channel and rejected two attempts to recover it, keeping the short-term structure cautious near 7,650, according to technical analysis from InvestingLive. The approaching 7,600-7,620 zone may provide an important test of whether the move remains a controlled pullback or develops into a deeper correction, the analysis said.
The former channel and recent rejection zone around 7,760-7,800 may now act as resistance, while the 7,700-7,725 area could offer an early signal of any recovery's strength. A sustained defense of the 7,600-7,620 support level could keep the broader August breakout intact, while a failure to hold it would raise the risk of a deeper retracement, the analysis said.
Sources: CNBC, InvestingLive
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