Treasury Sell-Off Sends Shockwaves: Magnificent 7 Grapples With Worst Day Since August, S&P 500's 200-Day Average Test Looms

In a tumultuous day for Wall Street, a widespread sell-off sent shockwaves through the financial landscape as U.S. stocks faced the brunt of a dangerous surge in Treasury yields.

The 30-year Treasury yield surged to 4.95%, marking a sharp 15-basis point jump in a single session, while the 10-year yield climbed above 4.80%, up by 12 basis points.

These remarkable spikes pushed both bond market key rates to their highest levels in more than 16 years, triggering apprehension among investors and reverberating across global asset classes.

VIX on the Rise, Magnificent 7 Stumble

The CBOE Volatility Index (VIX), often regarded as the market’s fear gauge, made a significant move, surging by 15%, reflecting the mounting anxiety in the financial markets.

All major stock indices found themselves in the red during this tumultuous session. The SPDR S&P 500 ETF Trust SPY experienced a 1.6% decline, while the SPDR Dow Jones Industrial Average ETF Trust DIA fell 1.5%, and the tech-heavy Invesco QQQ Trust Series 1 QQQ tumbled by 2%.

Even Wall Street’s celebrated “Magnificent 7 Stocks,” comprising Apple Inc. AAPL, Microsoft Corp. MSFT, Alphabet Inc. GOOG GOOGL, Amazon.com, Inc. AMZN, Meta Platforms Inc. META, NVIDIA Corp. NVDA and Tesla Inc TSLA, were not immune. These tech giants, often seen as stalwarts of the market, all witnessed declines for the day.

An equally weighted portfolio made up of these stocks saw a 2.5% decline, marking the worst session since early August 2023. Its performance since June has now trimmed to just 5%.

Chart: Magnificent 7 Slip 2.5% In A Rare Selloff For 2023

S&P 500 Nears Crucial Support, Market Breadth Weakening

As the broader market teeters on the edge, it nears a critical technical test that could potentially validate a change in trend.

Presently, the S&P 500 Index lingers at 4,229 points, drawing nearer to the pivotal 200-day moving average positioned at 4,200. Notably, the S&P 500 has traded above its 200-day moving average since March 27.

This level is also crucially important as it is located exactly at the midpoint of the range between 2023 highs and lows.

Meanwhile, market breadth is showing signs of weakening. A mere 12% of the companies within the S&P 500 are presently trading above their 50-day moving average, and only 38%, which is less than the majority, are trading above the 200-day moving average.

Chart: S&P 500 Is Dangerously Approaching Its 200-Day Average

Read Now: S&P 500 Nears Crucial Support: Analysts Warn of Disappointing Returns If 200-Day Average Is Breached