What to Know

  • The S&P 500 gained ground as traders focused on stronger U.S. economic data and looked past rising Treasury yields.
  • GDP Growth Rate came in at +2.2% in the second quarter, above the analyst forecast of +1.5%.
  • Personal Spending rose +0.9% month-over-month in August, topping the analyst forecast of +0.8%.
  • Personal Income increased +0.2% month-over-month, below the analyst consensus of +0.4%.
  • ADP Employment Change showed private businesses added +90,000 jobs in September, compared with the analyst forecast of +70,000.
  • The previous ADP reading was revised from +38,000 to +36,000.
  • PCE Price Index rose +0.3% month-over-month in August, below the analyst forecast of +0.4%.
  • The FedWatch Tool showed the probability of a rate hike at the October meeting declined to 37.1% after the PCE data.
  • The yield on 10-year Treasuries tested the 5.30% level, while the yield on 30-year Treasuries moved above 5.63%.
  • Nasdaq gained momentum on strong demand for technology stocks, while Dow Jones tested support at 51,100 to 51,200.

U.S. Stocks Split as Growth Data Supports Risk Appetite

U.S. equity markets traded with a divided tone as the S&P 500 advanced, Nasdaq drew support from technology demand, and Dow Jones struggled under pressure from consumer and healthcare stocks. The session was shaped by a busy set of economic releases that pointed to continued resilience in the U.S. economy, even as Treasury yields extended their climb and kept pressure on more rate-sensitive parts of the market.

The S&P 500 gained ground as traders reacted to stronger-than-expected growth figures and steady consumer activity. GDP Growth Rate was reported at +2.2% in the second quarter, beating the analyst forecast of +1.5%. That reading reinforced the view that the U.S. economy continues to expand despite tighter financial conditions, elevated borrowing costs, and persistent concerns about the path of monetary policy.

For equity bulls, the growth data offered an important counterweight to rising bond yields. Higher yields can reduce the appeal of equities by increasing the return available from lower-risk fixed income assets. They can also pressure valuation multiples, particularly for companies whose expected earnings are concentrated further in the future. However, in this session, traders appeared more focused on the message from economic activity than on the mechanical pressure from the bond market.

Consumer Data Shows Spending Remains Firm

Consumer figures also helped shape the market tone. Personal Spending increased by +0.9% month-over-month in August, above the analyst forecast of +0.8%. The reading suggested that household demand remained firm, a supportive signal for the broader economy because consumer activity is a major driver of U.S. growth.

At the same time, Personal Income grew by +0.2% on a month-over-month basis, below the analyst consensus of +0.4%. The gap between firm spending and softer income growth may draw attention from market participants in the coming sessions, as sustained consumption can become harder to maintain if income growth cools. Still, for the current market reaction, traders treated the spending figure as evidence that the consumer has not yet buckled under tighter financial conditions.

The combination of stronger GDP and resilient spending created a constructive backdrop for parts of the equity market. Communication services and technology stocks were among the biggest gainers, reflecting continued preference for sectors tied to growth themes and large-cap momentum. Energy stocks also gained some ground as oil markets moved away from recent lows, adding another source of support to the broader S&P 500.

Labor Market Data Adds to the Resilience Narrative

Labor market data further contributed to the session’s macro picture. ADP Employment Change for September showed private businesses added +90,000 jobs, exceeding the analyst forecast of +70,000. The previous report was revised from +38,000 to +36,000, but the latest reading still pointed to ongoing hiring in the private sector.

For traders, employment data remains important because the labor market is closely tied to consumer spending, inflation pressure, and Federal Reserve policy expectations. A labor market that remains strong can support household income and corporate revenues, but it can also complicate the inflation outlook if wage pressures remain sticky. In this case, the jobs figure was absorbed alongside a more encouraging inflation reading, helping risk sentiment rather than undermining it.

The broader takeaway was that the economy continues to show signs of durability. That resilience can support earnings expectations, especially for companies with pricing power or exposure to secular demand trends. However, it also keeps the policy debate alive, as stronger activity can make it more difficult for inflation to move decisively toward the central bank’s comfort zone.

PCE Inflation Reading Eases Rate-Hike Concerns

The PCE Price Index increased by +0.3% month-over-month in August, compared with the analyst forecast of +0.4%. The softer-than-expected reading was an important element of the session because PCE is closely watched by market participants when assessing inflation trends and Federal Reserve policy risks.

Following the PCE release, the FedWatch Tool indicated that the probability of a rate hike at the October meeting declined to 37.1%. That shift helped explain why equities were able to look past the continued increase in Treasury yields. A lower perceived probability of near-term tightening can support risk assets, particularly if traders believe inflation pressure is easing without a sharp deterioration in growth.

Still, the bond market remained under strain. The yield of 10-year Treasuries tested the 5.30% level as the sell-off in bonds continued. The yield of 30-year Treasuries climbed above the 5.63% level. These levels kept the pressure on interest-rate-sensitive groups, with consumer defensive and real estate stocks declining as traders focused on the implications of higher yields.

S&P 500 Technical Levels to Watch

From a technical perspective, market participants are watching nearby S&P 500 levels to determine whether the index can extend its advance or slip into a deeper pullback. If the S&P 500 settles below the 7700 level, technical traders may look for a move toward the 7660 level. A move below 7660 would open the way to a test of support at 7615 to 7625.

On the upside, the S&P 500 needs to settle above resistance at 7720 to 7730 to have a chance to gain upside momentum in the near term. If that breakout develops, chart watchers may look for a move toward the next resistance area at 7815 to 7825. These levels are likely to remain important as traders balance supportive macro data against the drag from rising yields.

The key issue for the S&P 500 is whether technology and communication services strength can continue to offset weakness in yield-sensitive sectors. If yields remain elevated, defensive and real estate stocks may continue to lag. However, if economic data keeps surprising to the upside while inflation indicators remain manageable, equity bulls may continue to find reasons to defend dips.

Nasdaq Extends Gains on Technology Demand

Nasdaq gained upside momentum as strong demand for technology stocks remained the defining feature of the session. Traders largely ignored rising yields and continued to favor companies connected to the technology leadership trade. Intel, up by +3.3%, was among the biggest gainers, highlighting firm demand for selected semiconductor and technology names.

Nasdaq is trying to settle above the 30,600 level. If this attempt is successful, technical traders may look for a move toward resistance at 30,750 to 30,800. A move above the 30,800 level would indicate that Nasdaq may be ready for a stronger rally, especially if large technology stocks continue to attract inflows.

On the support side, a move below the 50 MA at 30,418 would push Nasdaq toward the support level at 30,200 to 30,300. For now, the index appears to be benefiting from the market’s willingness to separate technology demand from the broader pressure created by rising yields. That divergence is notable because growth stocks are often sensitive to rate expectations, yet the current session showed that enthusiasm for technology can remain strong even when Treasury yields are moving higher.

Dow Jones Faces Pressure From Consumer and Healthcare Weakness

Dow Jones moved in the opposite direction, losing ground as demand weakened for consumer and healthcare stocks. Merck, down by -2.1%, was the worst performer in the Dow Jones index during the session. The index’s weaker performance stood in contrast to the S&P 500 and Nasdaq, which were supported by technology and communication services strength.

Market participants noted that the Dow Jones appeared more exposed to the pressure from rising yields, while technology-heavy areas of the market remained relatively insulated from the Fed policy outlook. This divergence underscores the importance of index composition. When investors favor technology and growth leadership, Nasdaq can outperform even as more traditional blue-chip segments struggle.

Technically, Dow Jones is attempting to settle below support at 51,100 to 51,200. If the index manages to settle below the 51,100 level, chart watchers may look for a move toward the next support zone at 50,300 to 50,400. The near-term path may depend on whether yield pressure continues and whether demand returns to consumer and healthcare names.

Market Outlook: Growth Strength Versus Yield Pressure

The broader equity outlook remains shaped by a familiar tension: economic data is strong enough to support earnings expectations, but rising yields continue to challenge valuations and sector rotation. The latest figures showed solid GDP growth, resilient personal spending, better-than-expected private job creation, and a softer PCE inflation reading. Together, these data points helped the S&P 500 and Nasdaq advance despite the bond market sell-off.

However, the divergence between major indices suggests that investors are not buying the entire market equally. Technology and communication services attracted demand, while consumer defensive, real estate, consumer, and healthcare pockets faced pressure. That kind of uneven participation can make index-level gains more fragile if leadership narrows too much.

For now, technical traders are focused on whether the S&P 500 can clear 7720 to 7730 and whether Nasdaq can establish itself above 30,600. A confirmed push above nearby resistance levels would strengthen the bullish case. Conversely, failures at resistance, combined with further increases in Treasury yields, could revive downside pressure and push traders back toward support levels across the major indices.

Frequently Asked Questions (FAQs)

Why did the S&P 500 move higher?

The S&P 500 moved higher as traders focused on stronger U.S. economic data, including GDP Growth Rate of +2.2% in the second quarter, firm Personal Spending, and a softer-than-expected PCE Price Index reading.

What was the latest GDP Growth Rate?

GDP Growth Rate was +2.2% in the second quarter, compared with the analyst forecast of +1.5%. The reading highlighted continued strength in the U.S. economy.

How did the PCE Price Index affect rate expectations?

The PCE Price Index increased by +0.3% month-over-month in August, below the analyst forecast of +0.4%. After the release, the FedWatch Tool showed the probability of a rate hike at the October meeting declined to 37.1%.

Why did rising Treasury yields not stop the S&P 500 rally?

Although the 10-year Treasury yield tested 5.30% and the 30-year Treasury yield moved above 5.63%, traders focused on resilient growth, strong spending, and easing rate-hike expectations after the PCE data.

Which S&P 500 sectors performed well?

Communication services and technology stocks were among the biggest gainers. Energy stocks also gained some ground as oil markets moved away from recent lows.

What are the key S&P 500 support levels?

If the S&P 500 settles below 7700, it may head toward 7660. A move below 7660 would open the way to a test of support at 7615 to 7625.

What are the key S&P 500 resistance levels?

The S&P 500 needs to settle above resistance at 7720 to 7730 to have a chance to gain upside momentum. If that happens, the next resistance area is 7815 to 7825.

Why did Nasdaq outperform?

Nasdaq gained upside momentum amid strong demand for technology stocks. Intel, which rose +3.3%, was among the biggest gainers during the session.

Why was Dow Jones under pressure?

Dow Jones lost ground as demand weakened for consumer and healthcare stocks. Merck, down by -2.1%, was the weakest performer in the Dow Jones index during the session.