The S&P 500 and Nasdaq indexes flipped from losses to gains on Thursday after each benchmark tested a key technical support level and held. The bounce came as traders weighed rising Treasury yields against a report that the U.S. and Iran may reach a deal to reopen the Strait of Hormuz.
The S&P 500 and Nasdaq indexes reversed course on Thursday, erasing earlier declines after buyers stepped in at a key support level each index had been sliding toward. The S&P 500 had earlier declined 0.5%, before the recovery took hold.
Buyers defend key levels
The S&P 500 fell 43.45 points at its session low before turning higher. It was last up 7.59 points, or 0.10%. The decline found support near the 100-hour moving average at 7667, and the index then moved back above its 200-hour moving average at 7681.68.
The Nasdaq Composite fell 229.90 points at its session low. It was last up 19.65 points, or 0.07%. Its low at 26706 held above the bottom of a swing area near 26676, and the index has since moved back above the top of that area near 26856. The Nasdaq 100, meanwhile, fell 266.13 points at its session low before bouncing off 30204.16, just above a swing level at 30195. It last traded up about 50 points, or 0.17%.
Yields and Middle East diplomacy in the background
The rebound unfolded as traders digested another move higher on Treasury yields, with the 10-year note surging to 5.15%, near levels not reached since July 2007. Equities got a lift, however, after Reuters reported that U.S. and Iranian negotiators in New York are considering a deal that would bring a phased end to the conflict in the Middle East, with Iran reopening the Strait of Hormuz in exchange for the U.S. lifting its economic blockade on Tehran.
Rising yields also fed expectations of further tightening: fed funds futures put a 66% likelihood on another Federal Reserve rate hike in October, up from roughly 55% a week earlier. For the S&P 500 and Nasdaq, holding Thursday's reclaimed support levels would strengthen the case for a continued recovery; slipping back below them would put the downside back in focus.
Sources: Investinglive, CNBC
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