US open: Stocks under pressure heading into the weekend

bank of america dl banks us finance — Bank of America branch in Palm Beach, Florida (U.S.A.)DL (AB)

US stocks were falling for the fourth straight day going into the weekend with investors watching key levels on the S&P 500 and longer-dated Treasuries to see if they held.

According to Michael Hartnett at Bank of America, the firm's contrarian models were now signalling that trading rally could unfold over the next three to four weeks but the S&P 500 needed to hold above 4,200 points and the yield on 10-year Treasuries below 5%.

As of 1549 BST the Dow Jones Industrial Average was down 0-40% at 33,278.03, alongside a 0.8% drop on the S&P 500 to 4,243.27 while the Nasdaq Composite was slipping 1.12% to 13,035.35.

The yield on a 10-year US Treasury jumped to a high of 4.997% just before the opening bell on Wall Street but was last trading down by six basis points to 4.928%.

West Texas Intermediate crude oil futures were up 0.8% and those for gold 1.02% higher with the latter changing hands at $2000.8/oz..

On Thursday, Federal Reserve chairman Powell left the door open to the possibility of further interest rate hikes, but added that rising yields might lessen the need for them.

Weighing on investor sentiment however, the Pentagon reported that US military bases in Iraq and Syria had been hit by small attacks over the preceding week.

There was also some criticism to be seen regarding the apparent lack of plans for Gaza and the Palestinian territories in the medium-term.

And there was also at least one aspect of what plans had been announced that was simply not clear, namely Tel Aviv's stated goal of "removing" Israel's responsibility for life in the Gaza strip.

On a more hopeful note, foreign ministers from France, Germany and the United Kingdom were scheduled to meet the leaders of Jordan, Saudi Arabia, and Turkey at an event hosted by Egyptian President Abdel-Fatah El-Sisi in Cairo on Saturday.

Stock movements

American Express shares were trading 4% lower on the back of its latest quarterly earnings report.

Solar company SolarEdge's shares were plummeting 30%, following a cut to revenue guidance.

BoA expects trading rally over next few weeks

On a mixed note, in a research note sent to clients overnight, BoA strategist Michael Hartnett said the firm's contrarian was now pointing to a trading rally, so long as the S&P managed to stay above the 4,200 point level.

He expected that to be the case, but there was a caveat, a trading rally was not the same as a "big low".

Their trading rules, three out of four of which were now giving off a contrarian 'buy' signal, "almost always" for trading rallies in the case of models based on one standard deviation, which encompassed about two-thirds of risk scenarios.

But in the case of two standard deviation exogenous shocks, such as the Lehman Brothers failure in 2008 or the Russia-Ukraine war in March 2022, that would "short-circuit" an oversold rally, Hartnett said.

Dow Jones - Risers

Merck & Co. Inc. (MRK) $102.29 1.85%
Verizon Communications Inc. (VZ) $31.99 1.31%
Coca-Cola Co. (KO) $54.92 1.06%
Johnson & Johnson (JNJ) $153.30 0.64%
McDonald's Corp. (MCD) $260.02 0.64%
Goldman Sachs Group Inc. (GS) $300.64 0.48%
Nike Inc. (NKE) $103.52 0.46%
International Business Machines Corporation (CDI) (IBM) $138.49 0.35%
Procter & Gamble Co. (PG) $148.74 0.33%
Boeing Co. (BA) $182.81 0.01%