At the opening bell, the US stock market slightly changed from yesterday's regular session closing levels. Although futures were showing quite a robust recovery in morning trading. Investors continue to digest earnings reports from key players and keep a close eye on the bond market, where Treasury 10-year bond yields continue to rise. The Dow Jones Industrial Average added 43 points or 0.1%. The broader S&P 500 and Nasdaq Composite fell by about 0.1% each.
The 10-year Treasury bond yield hit a high of 4.18% today, reaching levels not seen since 2008. The last high was around 4.17%. The rise in yields comes as the Federal Reserve is raising interest rates in anticipation of lower inflationary pressures. High yields are one reason why many strategists are skeptical that the stock market will sustain a bullish rally in the near term.
As it is noted above, several strong earnings reports supported the market, with shares of AT&T and IBM up 4.7% and 2.8% respectively. It happened after the companies beat their top and bottom line estimates for the third quarter of this year. Meanwhile, Tesla fell by nearly 6% after the electric car maker said on Wednesday night that it was likely not to meet its 2022 delivery plan. The company also reported quarterly revenue that fell short of analysts' expectations.
As for today's data, weekly jobless claims showed an unexpected decline but the Philadelphia Fed index was worse than economists predicted, indicating a contraction in the manufacturing sector.
As for the technical picture of the S&P 500 index, after a decline during the regular session, bulls need to defend the support of $3,699. It was noted in the previous analytical review that buying at the current highs is not reasonable. As long as the instrument is trading above $3,699, we can expect the demand for risky assets to persist. It may also strengthen the trading instrument and it is likely to pierce $3,735 in that case. Only this scenario will give investors hope for a further upward correction, breaking through the resistance of $3,773. The next target is located at $3,801. If the index declines, bulls will have to take action near $3,699 and $3,661. However, if the trading instrument pierces these levels, it may drop to $3,621 and open the way to a new support of $3,579, a new yearly low.
