Falling Treasury Yields Support Stocks — But Valuations Are Starting to Bite

• Falling Treasury yields are giving equities room to breathe, but valuation risk is rising.

• , and show improving setups, while and look more stretched.

• The next phase may reward selectivity far more than broad exposure.

U.S. equities are getting help from an important macro tailwind: long-term Treasury yields are easing again.

The has been trading around 4.75%, an area that has repeatedly behaved like resistance. More importantly, yields have moved lower over the past couple of sessions rather than breaking decisively above that zone.

That matters because the equity market does not need dramatically lower rates to benefit. It simply needs the bond market to stop tightening financial conditions at the margin.

The macro data are also holding up.

have returned to roughly their usual range near 200,000. The services PMI came in at 56.5, up from 54.6 the previous month, while the ISM services reading improved to 55.4 from 54.1.

Those are expansionary readings.

The combination of easing yields and firm business activity is constructive for equities because it removes one of the market’s biggest near-term risks without introducing an obvious recession signal.

The more difficult question is no longer whether the economy can support stocks. It is whether individual companies can justify the valuations investors are already paying.

That distinction is becoming increasingly important in software, cloud infrastructure, semiconductors and other long-duration growth stocks.

Spotify is beginning to reverse its long-term trend. Snowflake is still delivering exceptional earnings growth, but after a roughly 192% move in less than five months, the valuation risk is becoming impossible to ignore. Broadcom is profitable and growing, yet a P/E ratio around the mid-50s leaves little room for merely “good” results.

The market is still offering upside, but it is demanding more discipline.

Spotify Is Finally Confirming a Long-Term Reversal

Spotify has spent months trying to repair a difficult chart, and the technical picture is finally becoming more convincing.

The first important change was the move back above the 200-day moving average.

The stock had already tested that level once and failed to hold it. This time, the second breakout has been more durable.

That is a much stronger signal because the 200-day moving average often separates a temporary rebound from a genuine change in trend.

The next test is the descending correction trendline.

On the U.S. listing, Spotify has returned directly to that line. On the German Xetra listing, the stock was already beginning to move through it.

The earnings reaction also supports the idea that the market is changing its mind.

Initially, investors did not know how to interpret the results. The stock was bought, then sold, and the first reaction was indecisive.

A few days later, however, buyers took control.

That delayed bullish response is often more meaningful than the first hour after earnings because it shows where investors settle once the headline volatility fades.

Spotify’s fundamental story also remains attractive.

Paid subscribers continue to grow, the streaming model keeps becoming more mature, and the company has more room to improve monetization as the paying-user base expands.

The stock’s earlier pullback therefore looks less like the beginning of a structural deterioration and more like the reset that was needed after the previous advance.

The first meaningful upside area is around 550 to 600.

A move into that zone would not necessarily finish the long-term thesis, but it is a reasonable first target after a confirmed breakout from the current correction structure.

The most important risk is simple: Spotify still needs to clear the descending trendline decisively.

If it does, the long-term reversal becomes much harder to dismiss.

Snowflake’s Earnings Are Excellent — the Stock Is Becoming the Problem

Snowflake is still executing extremely well.

The latest quarter again beat expectations.

Revenue was expected at roughly $1.48 billion and came in at approximately $1.555 billion, around 4% above consensus.

The earnings surprise was much stronger.

The market expected EPS of roughly $0.45, while Snowflake delivered about $0.62 — approximately 37% above expectations.

The trend in EPS is particularly impressive.

Quarterly earnings per share were around $0.19 in 2024, roughly $0.35 in 2025, and are now above $0.60.

That is exactly the kind of operating progression investors want from a high-growth software company.

The problem is that the stock has already priced in an enormous amount of success.

Snowflake has risen roughly 192% in less than five months.

At that point, even strong earnings can become an excuse to take profits.

The latest post-earnings candle is therefore important.

Three months ago, a bullish earnings gap became the start of another major advance. This time, the stock again opened strongly, but the session began developing a red candle.

That difference should not be ignored.

A red candle after a bullish earnings gap can indicate that the market is using good news to distribute shares rather than accumulate them.

That does not mean Snowflake’s long-term trend has turned bearish.

It means the short-term trade may be approaching exhaustion.

If the stock begins falling over the next several sessions, the sensible response is not to argue with the fundamentals. It is to recognize that a stock can remain fundamentally strong while entering a multi-week or multi-month consolidation.

For existing holders, this is the point where raising stops makes sense.

Snowflake’s Earnings Growth Still Has a Quality Problem

The earnings beat is strong, but the underlying financial profile is not yet perfect.

Snowflake can report positive adjusted earnings per share while still producing negative net income.

Those measures are not always calculated on the same basis because certain expenses and accounting items can be treated differently.

That distinction matters.

Positive adjusted EPS is useful, but investors should be more comfortable when the company also produces clearly positive GAAP net income.

Snowflake is not there yet.

The company remains in the red on a full-year net-income basis.

That does not invalidate the growth story. Many companies can create enormous shareholder value while investing heavily and moving toward profitability.

The issue is valuation.

When a company is still losing money on a net-income basis, the market needs continued exceptional growth to justify an aggressive multiple.

After a nearly 200% move, the tolerance for disappointment becomes much lower.

Snowflake can still move higher.

But from here, the upside depends increasingly on the company continuing to beat estimates by wide margins rather than merely delivering solid execution.

That makes the risk-reward less forgiving.

Broadcom Shows Why Good Earnings Are No Longer Enough

Broadcom produced another strong quarter.

Revenue was expected at roughly $29.25 billion and came in near $29.59 billion, approximately 1% above expectations.

EPS was also around 3% better than expected, at approximately $3.32.

There is nothing wrong with those results.

The problem is what investors have to pay for them.

Broadcom’s P/E ratio is around 56 in the source figures, after reaching levels as high as roughly 92 toward the end of the previous year.

A mid-50s multiple is still expensive.

That valuation changes the standard the company must meet.

At a lower multiple, revenue 1% above expectations and EPS 3% above expectations would be enough to support the stock.

At a much higher multiple, those same numbers can look ordinary.

Investors are paying for continued acceleration.

That is why the post-earnings reaction has been more difficult.

The company is profitable, net income has risen dramatically and the long-term AI and semiconductor infrastructure story remains strong.

But the stock needs the fundamentals to keep catching up with the valuation.

Revenue growth from roughly 17 billion to 19 billion to 22 billion is impressive. Once the company reaches this scale, however, maintaining the same percentage growth becomes more difficult.

The market therefore wants more than a beat.

It wants visibility that the growth trajectory can remain exceptional.

Until that happens, Broadcom is more likely to consolidate than produce another immediate vertical move.

Space Exposure Still Requires Patience

The space-sector setup remains attractive over the long term, but the short-term valuation picture is more difficult.

The company discussed in the source has recovered sharply from around 106 toward 150.

That is a meaningful rebound.

The problem is that the business is still absorbing enormous investment.

Heavy capital expenditure is not necessarily negative. In a capital-intensive growth industry, spending can be exactly what creates the next decade of revenue.

But markets still have to price the near-term earnings impact.

The current business appears to depend heavily on satellite-internet revenue, while rockets remain expensive and competition is increasing.

That creates a difficult tension.

The long-term addressable market may be enormous, but the stock is already being valued on future success.

The recovery from around 100–106 was the more attractive entry zone.

At around 150, the margin of safety is smaller.

A return toward 200 is possible if execution continues to improve, but the stock may need more time before the fundamentals can support that level sustainably.

The better approach is to avoid chasing the rebound and wait for either a lower entry or a clearer fundamental acceleration.

Tesla Is Entering a Much More Constructive Phase

Tesla’s setup is becoming materially more interesting.

The stock generated a buy signal around August 31 near the $300 area and has continued moving higher.

The current move is not being driven by one catalyst.

Several businesses are beginning to contribute to the narrative at the same time.

Optimus remains a potentially important robotics platform.

Cybercab gives Tesla another autonomous-mobility catalyst.

The energy business is becoming increasingly important and may eventually rival the automotive segment in strategic significance.

The core vehicle business still matters, but Tesla is gradually becoming less dependent on a single revenue engine.

That diversification is important because it creates more ways for the company to surprise the market positively.

The stock could potentially return toward $400 and eventually $500 if those catalysts begin translating into visible revenue and margins.

That is not guaranteed.

The robotics business still needs execution. Cybercab needs commercialization. Automotive demand must remain strong enough to support the core business. Energy needs to keep scaling.

But the setup is much more constructive than it was around $300.

Investors who bought closer to that support now have room to stay with the trend while the market tests how much of the new narrative can become real financial performance.

Autodesk Is Beginning to Say the Downtrend May Be Over

Autodesk spent most of the year in a clear bearish structure.

The stock broke below the 200-day moving average early in the year and then lost the area around 279.

From that point onward, attempts to stabilize repeatedly failed.

The decline eventually reached the gap created on June 3, 2024 around $211.

Price briefly moved through that area and then produced a much stronger reaction.

That reaction is now important because Autodesk has broken above the small consolidation formed during the first technical rebound.

It has also moved above the high of that rebound from around August 27.

That is the first meaningful evidence that the downtrend may be ending.

It is too early to call a new long-term bull market.

The more likely scenario is that Autodesk begins building a broad base somewhere between roughly 200 and 280.

That process can take time.

The important levels are around 230 and 280.

Those are the zones where the stock can either fail again or prove that buyers are taking control.

Autodesk is therefore moving from “avoid” to “watch.”

That is a significant change, even if the stock is not yet a clean buy.

Health Is Still Bullish Long Term, but the Current Setup Is Awkward

CVS Health has repeatedly used bullish gaps as launch points.

In April 2026, a bullish gap combined with a move above the major moving averages created a clear buying opportunity.

Another bullish gap in May produced another continuation move.

The current setup is different.

CVS has now broken lower with a bearish gap and returned toward the previous high around 95.

That creates an uncomfortable middle ground.

The stock is no longer at the clean entry that existed before the previous bullish moves, but it is also not yet at a clear long-term breakdown level.

There are two realistic paths.

The first is a long accumulation around 95 followed by another move higher.

The second is a deeper pullback toward roughly 83, where the risk-reward could become more attractive again.

The technical risk is a potential head-and-shoulders formation.

If the stock forms the right shoulder and then breaks the neckline, the long-term bullish thesis would need to be reassessed.

For now, waiting is more attractive than forcing a trade.

Is a Great Setup at the Wrong Price

Guidewire has one of the strongest long-term technical structures in the group.

The stock formed a large cup-and-handle-type pattern over several years.

Resistance around 70 repeatedly mattered.

There was a failure near that area, a pullback, another long-term approach, and eventually a bullish gap through the level.

That is an extremely strong signal on a multi-year chart.

Long-term breakouts become especially meaningful when they clear levels that have mattered for years rather than weeks.

The problem is timing.

Guidewire is now around 93.

The stock can continue higher from here, but the best risk-reward existed closer to 70 or during the later re-entry when the stock returned toward that zone.

Buying after the move has already extended reduces the margin for error.

The trend remains bullish.

The stock remains attractive.

But there is a major difference between being bullish on a company and being willing to chase it at any price.

Guidewire currently belongs in the first category, not the second.

’s Post-Earnings Weakness Has Not Broken the Trend

Reddit’s earnings reaction looked dramatic, but the follow-through has been much less bearish than the first move suggested.

The stock fell from roughly 180 toward 135 after results.

User growth was somewhat weaker, but the disappointment was not enough to create a sustained breakdown.

Instead, Reddit filled the gap and began accumulating below the highs.

That matters because the absence of continued selling is itself a signal.

The market had a chance to push the stock lower and did not.

Index-related buying can also create additional demand if funds are required to increase exposure.

The company’s data remains another strategic asset.

Reddit owns an enormous archive of user-generated information that can potentially be licensed, monetized or become strategically attractive to larger technology companies.

That creates optionality beyond the core advertising and platform business.

A takeover should never be the primary investment thesis.

But strategic data value can provide another reason investors are reluctant to abandon the stock after one softer quarter.

For now, the broader bullish trend remains intact.

The right approach is to stay with the position while the stock continues holding relatively high after the earnings decline.

What Investors Should Watch Next

The market backdrop remains constructive because the two most important macro signals are moving in the right direction.

Long-term Treasury yields are easing rather than breaking higher, and the U.S. services economy is still expanding at a healthy pace.

That gives growth stocks room to perform.

But the market is becoming far less forgiving on valuation.

Spotify is beginning a credible long-term reversal and still has technical upside if the descending trendline breaks.

Snowflake is executing extremely well, but after a roughly 192% rally, the short-term risk has shifted toward profit-taking and consolidation.

Broadcom is profitable, growing and strategically important, yet a P/E ratio around the mid-50s means merely good results are no longer enough.

Tesla is entering a more constructive phase because several business lines are improving at the same time.

Autodesk may finally be transitioning from a downtrend into a base.

CVS remains a long-term bullish story with poor current timing.

Guidewire has a powerful multi-year breakout but is no longer near the best entry.

Reddit absorbed its earnings disappointment without losing the broader trend.

The common lesson is that the market still rewards strong fundamentals and improving technical structures — but entry price matters more now than it did earlier in the rally.

Falling yields can keep the door open for higher equity prices.

They cannot make an expensive stock cheap.

That is why the next stage of the market is likely to be less about owning everything and more about distinguishing companies that still have room for both earnings and valuation to move higher from companies where the price has already done most of the work.

Disclaimer: This article is written for informational purposes only. It is not intended to encourage the purchase of any assets and does not constitute an offer, solicitation, recommendation, or advice to invest. I would like to remind you that all assets are evaluated from multiple perspectives and are highly risky; therefore, any investment decision and the associated risk are the sole responsibility of the investor. Additionally, we do not provide any investment advisory services.