Wall Street Rebounds as Oil and Treasury Yields Cool

Key Takeaways:

*Wall Street rebounds after Fed shock — Nasdaq jumped 1.7%, S&P 500 gained 1.1%, and Dow rose 0.6% as investors digested the Fed’s 25bp hike.

*Tech and semiconductors lead gains — Nvidia, Amazon, Microsoft, Qualcomm and Intel advanced, while the semiconductor index climbed around 3%.

*Lower oil eases inflation fears — Brent and WTI extended declines as concerns over Middle East supply disruptions moderated.

Market Summary:

Wall Street staged a strong rebound on Thursday after the Federal Reserve’s first rate hike since 2023 initially triggered a sharp sell-off. The Fed raised its policy rate by 25 basis points to 3.75%–4.00%, with Chair Kevin Warsh stressing the need for a timelier return to the 2% inflation target and signaling that another hike could still be appropriate. After investors initially focused on the hawkish message, sentiment improved as Treasury yields retreated, with the 10-year yield falling back below 5% to around 4.93%–4.95%. Markets also began reassessing the pace of future tightening, with pricing putting the probability of an October hike around or above 50% in several reports.

The pullback in oil provided another important boost to equities. Brent and WTI fell for a second consecutive session, with Brent around $104 and WTI near $102 by Thursday’s close, as concerns over the scale of Middle East supply disruptions eased. Reports that Saudi Arabia was moving more crude through alternative routes, including shipments through Oman and ship-to-ship transfers, helped reduce some of the immediate supply fears surrounding the Strait of Hormuz. Lower energy prices were particularly supportive for equities because they reduce some of the inflation pressure that could otherwise force the Fed toward a more aggressive tightening path. At the same time, weekly jobless claims declined and some housing indicators showed resilience, reinforcing the view that the U.S. economy remains relatively firm despite tighter monetary policy.

Technology and semiconductor stocks led the recovery, with the Nasdaq Composite jumping around 1.7%, the S&P 500 gaining about 1.1%, and the Dow rising roughly 0.6%. The Philadelphia Semiconductor Index gained around 3%, while Nvidia and Amazon advanced more than 2%, Microsoft gained about 1.5%, Qualcomm rose around 2%, and Intel jumped roughly 7%. Investors also continued to focus on AI-related capital spending: Nvidia CEO Jensen Huang has indicated expectations for substantially higher chip demand, while the broader AI infrastructure theme remains an important driver of semiconductor and technology valuations. Generac also surged after announcing a major agreement to supply backup-power equipment for Amazon data centers, highlighting continued investment in the power infrastructure needed for AI computing. Meanwhile, software stocks remain an important theme, with the software ETF having risen roughly 40% since mid-April as investors increasingly view AI as something that can be integrated into existing software businesses rather than simply replacing them.

However, the rebound does not remove the broader risks facing Wall Street. Market breadth has shown some deterioration, with just over half of S&P 500 constituents trading below their 200-day moving averages, while names including Goldman Sachs, KLA, RTX and Starbucks recently slipped below that level. Financial stocks also remain sensitive to the rate environment after major banks sold off sharply following the Fed decision. Separately, major Wall Street banks have warned that the exceptional trading revenues seen during the second quarter may be difficult to repeat, with Bank of America expecting third-quarter sales and trading revenue to be flat and other banks anticipating slower growth or a seasonal sequential decline. Meanwhile, the S&P 500 remains vulnerable to renewed oil spikes, higher Treasury yields and further Fed tightening. The combination of easing oil prices and lower yields is currently supporting risk appetite, but persistent inflation, elevated rates, geopolitical risks and uneven market breadth remain key fundamental headwinds for Wall Street.

Technical Analysis 

Dow Jones, H4

Dow Jones is trading lower, currently testing the 51,560.00 support level, which acts as a key near-term downside pivot.

Momentum indicators remain bearish, with the MACD showing increasing bearish momentum and the RSI at 39 staying below the midline. This suggests that selling pressure remains in control.

Market attention is focused on a potential breakdown below 51,560.00. A confirmed break below this level could extend losses toward the next support level at 49,965.00, reinforcing the bearish short-term structure.

However, if bearish momentum begins to fade, the index may stage a technical rebound and retest the 53,180.00 resistance level, followed by 54,450.00 if recovery momentum strengthens.

Resistance Levels: 53180.00, 54450.00

Support Levels: 51560.00-, 49965.00