US stocks end lower as Treasury yields climb and oil prices jump

On Monday, US equities finished in negative territory as traders contended with rising Treasury yields and a sharp jump in crude oil.

The 10-year note yield climbed 4.7 basis points to 5.008%, once again crossing above the 5% threshold. Meanwhile, crude oil futures added $4.46, or 4.4%, settling at $105.85 per barrel.

A higher discount rate, driven by elevated yields, tends to put pressure on growth and technology stocks by reducing the present value of future profits. Surging oil prices additionally fuel worries over inflation and rising expenses for companies and households.

The losses occurred one day before the Federal Reserve's interest-rate announcement, with the central bank widely anticipated to hike its benchmark rate by a quarter of a percentage point.

US stock indices closed lower:

• Dow Industrial Average declined 328.05 points, or 0.63%, to finish at 52,098.20
• S&P 500 shed 34.23 points, or 0.45%, settling at 7,585.74
• Nasdaq Composite slid 204.84 points, or 0.78%, ending at 25,981.57
• Russell 2000 lost 21.95 points, or 0.76%, to close at 2,870.29
• Nasdaq 100 dropped 189.32 points, or 0.65%, to 28,937.84

Treasury yields rose across all maturities:

• 2-year: 4.6776%, an increase of 4.4 basis points
• 5-year: 4.8404%, an increase of 5.2 basis points
• 10-year: 5.0081%, an increase of 4.7 basis points
• 30-year: 5.3695%, an increase of 4.2 basis points

Technical view: S&P 500

The index finished at 7,585.74, a shade above the lower edge of a key swing zone at 7,573.60.

Since late May, that level has drawn in buyers repeatedly. Once more, those buyers are testing the support, but they must show they can regain the upper hand.

A recovery above 7,617.37 would be the first bullish signal. From there, the upper end of the swing zone, close to 7,619.97, would be the next resistance.

If the index consistently trades below 7,573.60, the bearish case would strengthen, with the ascending 100-day moving average at 7,506.89 emerging as the next significant support level.

Thus, even though the index maintained support through the session's end, the onus is on buyers to prove that this latest stand can spark a substantial recovery.

Technical assessment of the Nasdaq Composite

The Nasdaq Composite ended at 25,981.57, marginally under its 100-day moving average of 25,983.27 yet above swing support around 25,910.82.

This places the index between two carefully monitored technical levels.

Buyers are hoping for a move back above the 100-day moving average and a hold there. That would offer temporary relief and a firmer foundation for rebuilding.

If the index breaks below 25,910.82 and stays under it, sellers would gain more authority. The next major downside objective would be around 25,529.88.

Tuesday's trading will be crucial. A bounce above the 100-day moving average would benefit buyers. A fall below the swing support would signal a more bearish technical change.

Notable gainers and decliners

Energy stocks benefited from the crude oil rally:

• Occidental Petroleum climbed 2.82%
• Chevron added 2.64%
• Shell increased 2.59%
• Exxon Mobil rose 2.57%

Ciena added 4.59%, Qualcomm increased 4.30%, and BAE Systems climbed 3.77%.

In the red, crypto-linked stocks faced heavy selling:

• Coinbase tumbled 10.10%
• Strategy dropped 5.36%
• Grayscale Bitcoin Trust slid 3.65%
• Robinhood lost 3.39%

Shake Shack slid 8.25%, Chipotle retreated 5.94%, and Dollar Tree decreased 5.35%.

Trading insight

Support levels are zones, not certainties.

Both the S&P 500 and Nasdaq finished close to levels that have attracted buyers in the past. That provides a low-risk entry point for buyers, but upward confirmation is still required.

For the S&P, that confirmation starts with a return above 7,617.37. For the Nasdaq, it starts with a sustained climb above its 100-day moving average.

Until those levels are recaptured, buyers can only defend support, not seize control.