Stocks Defy Rising Yields as 5% Treasury Level Drives the Next Move

Stocks are stabilizing after recent selling, with S&P 500 futures still slightly negative but moving off their lows as the 10-year Treasury yield holds near 5.1%. The big relationship to watch is still rates: if yields and the dollar cool, stocks and precious metals have room to push higher, but if rates keep climbing, the pressure eventually reaches economic growth and earnings.

In One Minute

The market is holding up remarkably well despite a roughly 50 basis point rise in the U.S. 10 Year Treasury Yield (US10Y), from 4.67% on August 13 to about 5.1% now. The S&P 500 Index (SPX) is only about 1.5% below where it stood around its previous all-time high, and the Nasdaq Composite Index (IXIC) recently reached a new all-time high.

For me, that keeps the near-term structure bullish. A pullback in the 10-year yield toward 5%, especially if the U.S. Dollar Index (DXY) also backs away from resistance near 101.63, could give stocks and precious metals another leg higher. The risk is that rates remain elevated long enough to slow the economy and eventually weaken the earnings growth that has been supporting the bull market.

The Setup

Rates still control this market.

The bigger concern is what happens if funding pressures around the U.S. deficit eventually force rates higher. Higher rates slow economic activity, and if the economy slows enough, earnings come under pressure. Once earnings growth begins to stall, one of the major supports underneath the equity bull market starts weakening. But that is not what the market is signaling yet.

The S&P 500 fell about 0.75% yesterday, but the index has absorbed a major move higher in Treasury yields without suffering much technical damage. The 10-year yield moved from 4.67% on August 13 to roughly 5.1%, while the S&P 500 is only about 1.5% lower from that earlier area.

If the 10-year simply falls from 5.1% toward 5%, that 10 basis point decline could be enough to help the S&P 500 challenge another all-time high.

I still keep the much longer-term 100-year cycle risk in the back of my mind, including the possibility of a future decline much more severe than the Great Recession. But that is a long-term risk. It does not change the fact that the short-term market structure remains bullish.

What Changed

The U.S. Dollar Index has been moving sharply higher and is approaching trend line resistance around 101.63. That is an unusually fast move for the dollar, so this resistance area matters. If yields begin pulling back and the dollar also retreats from resistance, that combination would create a much better environment for both equities and precious metals.

Gold Spot (XAUUSD) is sitting directly on an important support trend line. Price briefly pierced that support but recovered back above it. As long as that trend line holds, I still see gold trading sideways with a slight upward bias, although there is plenty of resistance overhead.

If that support breaks, the picture changes. Gold could move back toward approximately $4,000 and potentially lower. Until then, I am giving support the benefit of the doubt and looking for a technical bounce.

Silver Spot (XAGUSD) is slightly weaker than gold, but it is also sitting directly on technical support. If that support fails, the next area is around $59 to $60. A break below that would bring approximately $55 into focus.

West Texas Intermediate Crude Oil Futures (CL) remain one of the biggest stories outside of rates. Oil has been heavily influenced by the Iran and U.S. conflict, although recent efforts toward de-escalation have helped take some pressure out of the market.

Oil reached technical support and is now bouncing. If it continues holding that support, I would not be surprised to see it trade sideways for a while. If the support trend line breaks, approximately $87 becomes the next downside target.

There is also a path toward roughly $80 before the midterms. I have a difficult time seeing oil move materially below $80 within this setup. Earlier this year, before the Iranian conflict, oil traded in the $60s, so even $80 would still leave crude more than 30% above those earlier levels.

Diesel remains another important part of this story because it is central to transportation, and heating oil becomes more important as winter approaches.

Natural Gas Futures (NG) continue hovering around the $3 breakout level. Sideways action here would be perfectly acceptable because it could develop into a bull flag and set up another move higher.

What I do not want to see is a steep decline away from this breakout area. Sideways or higher keeps the structure constructive, and I remain bullish on natural gas heading into the colder months.

On the equity side, Advanced Micro Devices, Inc. (AMD) recently reached a major trend line and created a short setup. That trade moved into positive territory. It is a good reminder that even inside a bullish market, individual stocks can still reach resistance and create valid short opportunities.

Meta Platforms, Inc. (META) is dealing with a classic sell-the-news reaction following its AI conference. Expectations had already pushed the stock higher, and the event did not deliver enough beyond what investors were already anticipating to keep that momentum going.

Meta has bounced from its premarket lows as the broader market recovered, but it is still trading into heavy resistance. The daily chart has two long upper wicks, and price filled the nearby gap. If Meta sells off more aggressively, the important support area sits around several former pivots and a previous breakout zone. No numerical price was provided for that area, so the structure itself is what matters.

Booking Holdings Inc. (BKNG) continues to fall as investors consider how artificial intelligence could pressure travel companies and other businesses that rely heavily on fees and margins.

The technical level I am watching is approximately $150. A move into that area would create a potential double bottom, and I would expect a meaningful technical bounce from there. That looks more like a swing setup, although the move could also become tradable on a shorter time frame.

Bank of America Corporation (BAC) is also moving toward an interesting technical area. Major support sits just below $55, where an ascending trend line lines up with a previous pivot. More selling into that area could create an attractive long setup.

McDonald’s Corporation (MCD) is different. The stock dropped 5% after the company acknowledged challenges around market share, major operational changes, higher costs, and earnings that may not meet previous expectations.

But the stock was already deeply oversold before that decline, and it has now reached a major long-term technical channel. That channel connects highs going back to 2012, several major pivots, and the 2020-era low.

McDonald’s is also sitting around 52-week lows with sentiment heavily negative. That creates a possible reversion trade. When most sellers have already dumped the stock, even a relatively small positive development can bring buyers back quickly.

Digital Assets and Crypto

Bitcoin (BTC) pulled back with gold and silver, but the larger technical structure continues to hold up well.

The most important change is that Bitcoin has now made another higher high. Before it took out the previous high, the rally could still reasonably be treated as a strong bear market rally. Once that previous high was broken, the probabilities shifted.

Bitcoin broke above resistance, consolidated, and established a higher high. That previous resistance can now become technical support on a pullback. For me, that means the short-term bear market is over unless price proves otherwise.

That does not mean Bitcoin is going straight up. I still expect large pullbacks. What matters is whether Bitcoin continues holding former resistance as support and maintains the pattern of higher highs.

As long as that structure remains intact, the evidence favors the idea that the previous bear market has ended and the market has moved into a different phase.

Why It Matters

The connection between all of these markets comes back to rates and liquidity. If the 10-year yield eases from 5.1% toward 5% and the dollar backs away from 101.63 resistance, equities get relief, gold and silver get breathing room, and risk assets have a better chance of extending higher.

If yields stay elevated or continue rising, that pressure eventually works its way into borrowing costs, economic growth, and corporate earnings.

Oil matters because elevated energy prices add another layer of pressure. Precious metals matter because both are testing important support. Bitcoin matters because its higher high is signaling a change in market structure. And within stocks, this is becoming much more selective, with some names sitting at resistance while others are approaching support areas where reversal setups can develop.

Key Levels

The two levels that matter most to the broader market are the 10-year yield around 5.1% and dollar resistance near 101.63. If both begin easing, the pressure comes off several asset classes at the same time.

Bull Case

For stocks, the cleaner bullish setup starts with the 10-year yield moving toward 5% while the dollar backs away from 101.63 resistance. That could give the S&P 500 another opportunity to reach a new all-time high.

Gold remains constructive as long as its support trend line holds. Silver stays constructive while its own technical support remains intact. Oil holding support would keep it in a sideways range rather than opening another major downside leg. Natural gas staying around $3 or moving sideways could form a bull flag and support another move higher.

Booking Holdings becomes more attractive if it reaches approximately $150 and confirms a double bottom. Bank of America becomes more interesting if selling pushes it just below $55 into its rising trend line. McDonald’s remains a potential reversion trade as long as its long-term channel continues holding.

For Bitcoin, the bullish structure stays intact as long as former resistance becomes support and the sequence of higher highs remains in place.

Bear Case

The broader risk is still rates. If Treasury yields remain elevated or continue moving higher, the pressure eventually reaches economic growth and corporate earnings.

Gold becomes more vulnerable if its trend line support breaks, with approximately $4,000 and potentially lower prices coming into play. Silver weakens if current support fails. The next area is $59 to $60, and a break below that opens approximately $55.

Crude oil becomes more bearish if its support trend line breaks. That puts approximately $87 into focus first, with roughly $80 possible afterward. Natural gas loses some of its bullish structure if it falls sharply away from the $3 breakout area instead of consolidating.

Meta remains vulnerable while it is trading into resistance with two long upper wicks and a filled gap. Bitcoin would weaken the current conclusion if it fails to hold former resistance as support and begins reversing the higher high structure.

What to Watch Next

The first thing I am watching is the 10-year Treasury yield around 5.1%. A move toward 5% would be meaningful.

Next is the dollar around 101.63. If that resistance holds while yields pull back, stocks and precious metals could both benefit. For gold and silver, I want to see whether the current support trend lines continue holding.

For oil, the support trend line is the decision point. A breakdown puts $87 in play and potentially $80. Natural gas needs to stay around the $3 breakout area without a sharp decline.

For individual stocks, I am watching Booking Holdings near $150, Bank of America just below $55, McDonald’s at its long-term channel, and Meta around its current resistance structure. And in crypto, Bitcoin needs to prove that former resistance can now function as support.

Bottom Line

The most important relationship right now is still rates versus risk assets. The S&P 500 is holding up surprisingly well with the 10-year yield around 5.1%, and even a modest move back toward 5%, especially with the dollar retreating from 101.63, could give stocks, metals, and Bitcoin more room to work higher.

At the same time, gold, silver, oil, natural gas, several major stocks, and Bitcoin are all sitting near meaningful technical areas. This is not the place to chase movement. Let price come to the levels, let support or resistance prove itself, and then make the market confirm the next move.