The final trading day of the month also marks the start of a new trading week for the broader S&P 500 and Nasdaq Composite. Despite the day's decline, the S&P remains up 2.54% for the month, while the Nasdaq has gained 3.69%. Both indices are trading lower today, however, giving back a portion of those gains.

The pressure follows concerns about rising U.S. interest rates in the wake of hawkish comments from Fed Chair Kevin Warsh at Jackson Hole on Friday. Escalating tensions in the Middle East have also driven oil prices sharply higher. Higher oil and higher bond yields tend to weigh on equities by lifting borrowing costs and squeezing corporate profit margins, which helps explain why rate- and growth-sensitive indexes like the Nasdaq are sensitive to shifts in Fed rhetoric. In the bond market, the U.S. 10-year yield is up 3.8 basis points at 4.76%, while the 30-year yield is up 5.2 basis points at 5.260%, keeping upward pressure on rates at the long end of the curve.

S&P 500 technical picture

The S&P 500 is currently down about 31 points, or 0.41%, at 7678.26. The decline has taken the index below its 100-hour moving average at 7716.94 and toward the midpoint of the range between that level and the 200-hour moving average at 7632.08. Moving averages of this type are closely watched by short-term traders as momentum gauges: holding above them is generally read as a sign of buying demand, while breaks below them are treated as early evidence of fading strength.

Slipping below the 100-hour moving average has drained some of the bullish momentum from the market. With the index still holding above the 200-hour moving average, however, buyers remain in play. That leaves the short-term technical bias broadly neutral, with traders waiting for the next directional break.

A move back above the 100-hour moving average at 7716.94 would hand buyers more control and shift attention toward the all-time high at 7816.70. Conversely, a break below the 200-hour moving average at 7632.08 would tilt the bias more firmly toward sellers and open the door to the rising 100-day moving average at 7441.52. With the index sitting between two widely watched hourly levels, the coming sessions are likely to hinge on which side of that range gives way first.

Nasdaq Composite mirrors the pattern

A similar technical dynamic is unfolding in the Nasdaq Composite. The index is currently down around 75 points at 26,328, putting it below its 100-hour moving average at 26,387.90 while remaining above its 200-hour moving average at 26,020.64.

As with the S&P 500, the drop below the 100-hour moving average removes some of the bullishness from the technical picture, but the 200-hour moving average continues to provide support and keeps buyers in the game.

A move back above the 100-hour moving average at 26,387.90 would tilt the bias back in the buyers' favor. On the downside, a break below the 200-hour moving average at 26,020.64 would give sellers greater short-term control, with the 100-day moving average at 25,753.74 standing as the next key target.