more trouble ahead if support for sp 500 fails near 3970 analyst rising treasury yields appeared tuesday to finally catch up with a previously resilient stock market leaving the dow jones industrial average and other major indexes with their worst day so far of 2023 yields are popping across the curvethis time it seems market rates are playing catch up with fed funds said veteran technical analyst mark arbeter president of arbeter investments in a note typically market rates tend to lead the way he observed since the beginning of the month traders in fedfunds futures have priced in a more aggressive federal reserve after initially doubting the central bank would hit its forecast for a peak fedfunds rate above 5 a few traders are now even pricing in the outside possibility of a peak rate near 6 the yield on the 2year treasury note jumped 108 basis points to 4729 its highest finish to a us session since july 24 2007 the 10year treasury yield climbed 126 basis points to 3953 its highest since nov 9 meanwhile the us dollar has also rallied with the ice us dollar index adding 02 to a february bounce arbeter also noted that breadth indicators a measure of how many stocks are participating in a rally had previously deteriorated with some measures reaching oversold levels just another perfect storm against the equity markets in the short term he wrote rising yields can be a negative for stocks increasing borrowing costs more important higher treasury yields mean that the present value of future profits and cash flow are discounted more heavily that can weigh heavily on tech and other socalled growth stocks whose valuations are based on earnings far into the future those stocks were pummeled heavily last year but have led gains in an early 2023 rally remaining resilient through last week even as yields extended a bounce yields have been on the rise after a run of hotterthanexpected economic data which have boosted expectations for fed rate hikes weak guidance tuesday from home depot inc hd and walmart inc wmt also contributed to the tone home depot sank more than 7 making it the biggest loser on the dow jones industrial average  the drop came after the homeimprovement retailer reported a surprise decline in fiscal fourthquarter samestore sales guided for a surprise drop in fiscal 2023 profit and earmarked an additional 1 billion to pay its associates more while wall street expects resilient consumers following last weeks robust retail sales report home depot and walmart are much more cautious said jose torres senior economist at interactive brokers in a note this mornings data offers more mixed signals concerning consumer demand but during a traditionally weak seasonal trading period investors are shifting toward a glass halfempty view against the backdrop of a year thats featured the exact opposite so far a glass halffull perspective he wrote the dow slumped 69710 points or 21 to close at 3312959 while the sp 500 dropped 2 to close at 399734 finishing below the 4000 level for the first time since jan 20 the drop cut the sp 500s yeartodate gain to 41 according to factset which is less than half of the 9 yeartodate gain it had enjoyed at its feb 2 peak the nasdaq composite fell 25 trimming its yeartodate gain to 98 the losses left the dow marginally negative for the year down 05 it was the worst day for all three major indexes since dec 15 according to dow jones market data arbeter identified a very interesting cluster of support just below the tuesday low for the sp 500 with the convergence of a pair of trend lines along with the indexs 50 and 200day moving averages all near 3970 see chart below if that zone does not represent the pullback lows we have more trouble ahead he wrote