Market On Close: Stocks Hold Firm as Treasury Yields Press Toward the Critical 5% Level

Stocks finished the week on a strong note, with the S&P 500 Index (SPX) up 0.86%, helped by a pullback in oil even as Treasury yields reversed higher during the session. The bigger question now is whether SPX can keep holding key support while the U.S. 10 Year Treasury Yield (US10Y) pushes toward 5% and the Federal Reserve prepares for what is now viewed as a likely rate increase next Wednesday.

In One Minute

The market remains bullish for now, but next week is all about the relationship between oil, Treasury yields, the Fed, and SPX support. The probability of a 25 basis point Fed rate increase is 86.5%; US10Y is pressing toward the critical 5% area; West Texas Intermediate Crude Oil (WTI) has pulled back after hitting $104 resistance, and SPX remains constructive as long as it holds roughly 7,570. The biggest risk is a sustained breakout in yields above 5%, which could pressure stocks, precious metals, and other risk assets.

The Setup

Inflation and rates are back in control of the market conversation.

The latest Consumer Price Index was mostly in line, but core CPI came in hotter than expected at 0.3% versus 0.2% anticipated. At this point, the probability of a Fed rate increase next Wednesday sits at 86.5%, so the market is largely treating a 25 basis point hike as a lock. Even a sharp $20 drop in oil next week may not be enough to change that outcome.

The Fed decision comes at 2:00 PM after the Tuesday and Wednesday meetings, followed by the press conference at 2:30 PM. Since the rate increase is already largely priced in, what Kevin Warsh says about future hikes could matter more than the initial decision itself.

US10Y is the chart I am watching closely. Yields fell overnight as oil declined, dropped again after CPI, then reversed throughout the session and finished higher. US10Y closed at 4.7%, just three basis points below 5%. That 5% area lines up with the October 2023 pivot high and creates a potential double top. If that resistance fails and yields begin making new highs, we would be looking at levels not seen since 2007.

What Changed

SPX gained 0.86%, held most of its opening gap, and remains bullish as long as it does not close below roughly 7,570. Below that level, the market moves into a more neutral zone. A break below 7,400 would be much more serious because the next major technical level is 7,000, another 400 points lower.

WTI reached the major $104 resistance level and pulled back, finishing just above $100 per barrel. Oil did move slightly higher again late in the session, possibly reflecting reluctance to hold short positions through a weekend where additional Middle East escalation could occur while futures are closed. The current view remains that oil could move lower next week.

The U.S. Dollar Index (DXY) did not do much. It continues to hold between technical support around 9850 and an ascending trend line near 100, with a modest bounce during the second half of the week.

Gold Spot U.S. Dollar (XAUUSD) traded as high as $4,400 while yields and the dollar were weaker, then gave back more than half of those gains and finished up about 0.6%. The key level is $4,300. Gold has a head and shoulders pattern, but it does not become bearish unless there is a daily close below the $4,300 neckline.

Silver Spot U.S. Dollar (XAGUSD) also recovered enough to hold its trend line and finish with a small gain. Silver has a similar shoulder, head, shoulder structure and needs to hold $6375. If gold and silver lose those support levels, the calculated targets move back toward their recent lows from earlier this year.

Natural Gas Futures (NG) sold off but recovered from the lows and showed some resilience. The chart remains neutral because natural gas still needs to recapture the $2.83 level before the bullish bias returns.

Oracle Corporation (ORCL) produced one of the more important earnings reactions. Oracle was up 67% after hours and remained strong into the morning, then gave the entire move back. The stock finished down 1.75%, and the move from the intraday peak to the trough was roughly 10%. Earnings were good, but investors remain nervous about the amount of debt being taken on by hyperscalers, especially if higher oil prices begin putting more pressure on consumers and the broader economy.

Apple Inc. (AAPL) had another strong day following the debut of its foldable iPhone. Apple continues moving toward a major gap fill near the base of a previous long upper wick. If that gap fills, the setup becomes a potential swing short because that area previously marked the top before the earlier decline.

Amazon.com Inc. (AMZN) also performed very well, along with several other Magnificent Seven names. At the same time, memory-related stocks continued struggling. SanDisk Corporation (SNDK) fell about 3.5%, Seagate Technology Holdings plc (STX) dropped almost 4%, and Western Digital Corporation (WDC) remained part of that weak group. Micron Technology Inc. (MU) opened higher around $1,000 and closed around $9.75. These names continue to produce short bursts of strength followed by sharp downside reversals.

Dell Technologies Inc. (DELL) was the standout, gaining 12% and reaching another all-time high. Dell traded around $112 in January and is now at $566. The momentum remains extremely strong, but the next question is where that move finally reaches a technical pivot high and begins to reverse.

Digital Assets and Crypto

Bitcoin U.S. Dollar (BTCUSD) is sitting at an important technical decision point.

Bitcoin rallied to almost $80,000 earlier in the session as yields and the dollar weakened, then gave back a large portion of the move. Unlike gold and silver, Bitcoin does not have a head and shoulders pattern. Instead, it continues building a base where repeated pullbacks have attracted buyers.

The major level is roughly $76,000, or slightly below it. As long as Bitcoin stays above that area, the broader structure remains bullish and can still be treated as a larger bull flag consolidation that eventually breaks higher.

If Bitcoin starts trading below $76,000, the setup changes significantly. That opens the door to a much larger retracement toward $66,000 to $67,000, which is the first major technical area below and a potential swing entry zone if Bitcoin eventually reaches it.

Why It Matters

The key relationship is yields.

If US10Y moves above 5% and continues higher, pressure increases across stocks and precious metals. That could push SPX below 7,570 and into its neutral zone, while a more serious breakdown below 7,400 opens the path toward 7,000.

Gold and silver are also directly tied to this setup. Rising yields increase the risk of their bearish patterns triggering, while a pullback in yields gives both metals a better chance of holding support and breaking above their recent highs.

Oil matters because higher energy prices add to inflation pressure. Continued geopolitical tension around the Strait of Hormuz, the Red Sea, and strikes on Saudi Arabian oil facilities keeps that risk alive heading into the weekend and the Fed meeting.

Key Levels

The two levels controlling the broader market are 5% on US10Y and roughly 7,570 on SPX. Bitcoin’s equivalent decision point is $76,000.

Bull Case

The bullish case starts with SPX holding 7,570. As long as that level remains intact, the current bullish structure stays in place even if yields test 5%.

Gold needs to hold $4,300, and silver needs to hold $6375. If yields begin pulling back, both metals have a better chance of holding those levels, breaking above their recent highs, and continuing higher.

Natural gas needs to recapture $2.83 to restore its bullish bias.

Bitcoin remains bullish above roughly $76,000. Holding that base keeps the larger bull flag intact and preserves the setup for an eventual upside breakout.

Apple can continue grinding higher toward its major gap fill, Amazon remains strong, and Dell continues showing powerful momentum after another all-time high.

Bear Case

The first warning for stocks is an SPX close below roughly 7,570. That moves the market into a neutral zone. A break below 7,400 is much more serious and opens the technical path toward 7,000.

A sustained US10Y breakout above 5% would increase that downside risk and put additional pressure on gold and silver. A daily gold close below $4,300 activates the bearish head and shoulders pattern, while silver losing $6375 creates a similar downside setup. The calculated targets for both metals would be back near their recent lows from earlier this year.

Bitcoin losing $76,000 would also change the structure materially and open the door toward $66,000 to $67,000.

Oracle’s reversal is another warning sign. Strong earnings were not enough to keep buyers committed, while concerns around hyperscaler debt remain in the market. Memory names are also continuing to struggle despite occasional short-term rallies.

What to Watch Next

Wednesday is the main event. The Fed decision comes at 2:00 PM, followed by the 2:30 PM press conference, where the discussion around future rate increases could determine the next major move in Treasury yields.

Before then, watch whether US10Y tests or breaks 5%, whether WTI continues pulling back after rejecting $104, and whether SPX can stay above 7,570.

Gold at $4,300, silver at $6375, natural gas at 283, Apple near its gap fill, and Bitcoin around $76,000 are the other technical decision points that matter.

There is not much major company reporting until early September, when banks begin the next earnings season, so the Fed, Treasury yields, oil, and these key support levels remain the main focus.

Bottom Line

The market is still bullish, but that bullish view is becoming increasingly dependent on yields staying contained and SPX holding 7,570.

If US10Y rejects 5%, oil continues pulling back, and SPX holds support, stocks, precious metals, and Bitcoin all have room to stabilize or continue higher. If yields break through 5%, SPX loses 7,570 and then 7,400, gold loses $4,300, silver loses $6375, or Bitcoin loses $76,000, the risk picture changes quickly.

This is not the time to trade the story ahead of the chart. Let the levels confirm the move, stay patient, and let price decide what comes next.