S&P 500 and Nasdaq 10020 October 2026

S&P 500, Nasdaq 100 bounce on chip rally, but narrow breadth and a 5.14% yield keep gains fragile

By admin

S&P 500 and Nasdaq 100, three months. Chart by TradingView.

Where we are

US stocks opened the week with a rebound after last week's heavy tech selloff, with the Nasdaq gaining 1.11% to 26,430.89 and the S&P 500 adding 0.42% to 7,691.07, while the Dow Jones Industrial Average slipped 0.06% to 51,970.20 [1]. The Philadelphia Semiconductor Index snapped an eight-session losing streak, during which it had fallen about 15.7%, its longest run of declines since October 2008 [1]. CoreWeave rose after a Goldman Sachs upgrade to "buy," and Intel gained after a J.P. Morgan upgrade to "neutral" [1]. Deutsche Bank strategists noted that almost two-thirds of S&P 500 components still lost ground even as the index closed higher, a sign the bounce was concentrated in a narrow group of names [2].

The macro picture

The rebound unfolded against a backdrop of rising Treasury yields, with the 10-year yield up 6.6 basis points to 5.14% and the 2-year yield up 6.5 basis points to 4.77%, with Deutsche Bank saying higher real yields, not inflation breakevens, drove the move as markets priced in slightly more Federal Reserve rate hikes into mid-2027 [2]. Danske Bank said the tech rally held up despite higher yields, suggesting it reflected investors viewing last week's selloff as overdone rather than easier financial conditions [3]. investingLive said elevated borrowing costs could still "pour cold water" on the recovery and questioned whether heavy AI spending is failing to justify valuations [4]. S&P Global flagged potentially hidden AI debt at hyperscalers as spending surges [5], while South Korea's Elice fell as much as 32% on its Seoul trading debut amid investor doubts about AI capex payoff [6][7][8].

The chart

The S&P 500 closed at 7,691, down 1.5% over the past week and essentially flat over four weeks, trading in a Range regime just below its rising 50-day moving average of 7,705 and 5.7% above its 200-day average of 7,276 [9]. The RSI of 47 sits near neutral, with nearest support at 7,638 and resistance at 7,772 [9]. The Nasdaq 100 closed at 29,529, down 3.7% over the week and 3.1% over four weeks, also in Range territory, 1.1% below its 50-day average of 29,864 with an RSI of 41 [9]. Nearest Nasdaq 100 support sits at 28,953 and resistance at 29,656, with the 52-week high of 31,361 set on 6 October still well above current levels [9].

What would change our mind

A daily close back above the S&P 500's 50-day moving average near 7,705 or the Nasdaq 100's near 29,864 would suggest the rebound is broadening rather than narrowing [9]. A further rise in the 10-year yield beyond its recent swing high of 5.36% would, per Deutsche Bank's framework, likely keep pressuring tech valuations by raising discount rates on future earnings [2][9]. Conversely, confirmation from major earnings, particularly Meta's, that AI spending is generating meaningful returns, as investingLive flagged, would support the case for a sustained recovery rather than a technical bounce [4]. Continued weak IPO demand for AI-linked data-center names, as seen with Elice, would reinforce doubts about financing for the sector [6][10].

Events to watch

SpaceX earnings, due Tuesday, are seen by Danske Bank as a near-term test for the AI narrative [1][3].
Meta and Tesla are scheduled to report earnings on Wednesday [1].
The full schedule for the week will be on the Praevis calendar page.

Sources

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