U.S. equities pulled back last week, snapping a three-week winning streak as the strong earnings season neared its end. The Dow Jones Industrial Average (DJIA), S&P 500, and Nasdaq fell between 0.8% and 2.0%.
The DJIA closed 1.4% below its recent record high, while the tech-heavy Nasdaq remained 3.4% below its peak from early June.
Treasury yields edged higher over the week as total U.S. gross debt crossed the USD 40 trillion threshold for the first time:
- 30-Year Treasury Yield: Reached 5.27%, hovering near a two-decade high.
- 10-Year Treasury Yield: Stood at 4.73%.
- 2-Year Treasury Yield: Settled at 4.23%.
Persistent global inflation pressures continued to drive long-term borrowing costs higher across major industrial economies, pushing Japan’s 10-year yield and Germany’s 30-year yield to multi-decade highs.
To relieve market pressure at the long end of the yield curve, the U.S. Treasury announced plans to double its bond buyback program to USD 4 billion per session.
Meanwhile, oil prices climbed for a second consecutive week. Driven by renewed geopolitical concerns in the Middle East and the Strait of Hormuz, U.S. crude rose from USD 82 per barrel to around USD 87 per barrel.
Choppy, high-stakes trading is expected in U.S. equities this week, driven by several key macro and corporate events:
- Nvidia Earnings: The chipmaker’s quarterly results will serve as a key bellwether for technology valuations and AI-driven market sentiment.
- Jackson Hole Symposium: Investors will closely monitor the Federal Reserve’s annual Economic Policy Symposium beginning Thursday, with Fed Chair Kevin Warsh’s Friday address scrutinized for future monetary policy signals.
- Yield and Geopolitical Movements: Reactivity to U.S. Treasury buybacks, bond market supply, and Middle East developments will remain core swing factors.
Despite elevated yields and stretched valuations presenting persistent headwinds, these risks may be partially offset by strong corporate earnings momentum and resilient economic data. Broader risk appetite remains intact, underscored by the Cboe Volatility Index (VIX) hovering near eight-month lows.
According to Kenanga Investment Bank, the DJIA’s primary uptrend remains structurally intact, anchored by rising moving averages and price action well above key technical support levels.
However, with the index trading near the upper boundary of its rising trend channel, a weekly Stochastic indicator in overbought territory, and softening RSI momentum, near-term consolidation or profit-taking appears increasingly likely. Kenanga expects the market to maintain a choppy trajectory with a mild downward bias this week
