AI-driven tech rally holds despite Treasury yields at 24-year highs

October 4, 2026 at 06:00 PM2 min

This digest was compiled by AI from multiple sources — links to the originals are below.

Wall Street's AI-driven tech rally is holding firm even as long-term Treasury yields trade at their highest levels since 2002. The Nasdaq 100 hit a record on Friday and is up 22% this year, while the S&P 500 sits less than 1% below its August all-time high. Investors are betting that third-quarter earnings from tech giants will justify the valuations.

Key Facts

The 10-year Treasury yield recently topped 5.3% and the 30-year yield reached 5.69%, their highest levels since 2002.
The Nasdaq 100 closed at a record on Friday and has gained 22% this year, while the S&P 500 is less than 1% below its August record.
Microsoft, Nvidia, and Apple were the largest point contributors to S&P 500 and Nasdaq 100 gains over the last three months.
Third-quarter earnings per share for the tech sector are projected to rise more than 65%, according to Bloomberg Intelligence.
Overall S&P 500 earnings are expected to increase more than 24%, which would mark a third consecutive quarter of growth exceeding 20%.

Yield Surge

Long-term Treasury yields have climbed to levels not seen in more than two decades. The 10-year yield recently topped 5.3% and the 30-year yield reached 5.69%, both the highest since 2002. Ken Mahoney, chief executive officer of Mahoney Asset Management, said the higher rates have put investors on edge. Matt Stucky, chief portfolio manager at Northwestern Mutual, said the 5% threshold that once seemed like a limit is already in the rearview mirror.

Tech Earnings Expectations

Investors are counting on strong earnings growth from the largest technology companies to sustain the rally. Third-quarter earnings per share for the tech sector are projected to jump more than 65%, the second-fastest growth after energy, according to Bloomberg Intelligence. Overall S&P 500 earnings are expected to rise more than 24%, which would be the third straight quarter of growth above 20%. Rob Conzo, chief executive officer of the Wealth Alliance, called the expected earnings growth historic.

AI Investment Boom

Artificial intelligence has been the primary driver of stock market gains over the last three years. Companies are spending hundreds of billions of dollars to build out AI infrastructure, creating a virtuous circle for investors. The spending benefits both the large technology companies making AI progress and the suppliers of chips and data center construction. The AI investment boom is also changing the financial profiles of some of those companies.