Nasdaq, S&P 500, Dow Jones bounce; yields keep tumbling with 10-year below 3%

ozgurdonmaz/E+ via Getty Images

The stock market is experiencing a technical rebound Tuesday as buyers look to avoid a four-session losing streak.

The VIX is lower this morning, but still above 33.

The S&P (SP500) +1.8% is gaining after falling below the 4,000 level yesterday. The Nasdaq (COMP.IND) +2.7% and Dow (DJI) +1.4% are also higher.

There was some positive commentary on the sell side, with J.P. Morgan’s Marko Kolanovic saying selling was mainly due to liquidity and looked overdone. Canaccord’s Tony Dwyer said stock looked oversold enough for a summer rally.

Yields are falling again. The 10-year Treasury yield is down 10 basis points to 2.98%, while the 2-year is down 5 basis points to 2.57%.

On Monday, rates also tracked stocks lower as cash moved to safety. That’s something the market hasn’t seen in a while during an equity selloff.

It “took a big yield drop yesterday for equities to find a base, and if the S&P rises further today, yields will head back up sharply,” SocGen’s Kit Juckes said. “So, it could be volatile, and it’s worth keeping more than one eye on credit spreads while that happens. That particular canary is just warming up its vocal cords.”

“The price action of late has been remarkable,” ING said. “The big upside test seen for US yields has been driven overwhelmingly by rises in real rates, and that pressure remains. At the same time the big fall in US market rates late yesterday was driven by a fall in US inflation expectations.”

“The latter bit will please the Fed. They delivered 50bp, and the promise to deliver another 100bp in the next couple of months, while chunky, is still below where the market discount had been. The risk the Fed ran was that inflation expectations could have spiked. That has not happened.”

See the stocks making the biggest moves this morning.