Yields Surge but Stocks Show No Panic as AI Earnings and Economic Resilience Provide Support
nashnova research
The U.S. 10-year Treasury yield broke 5.04% for the first time since late 2023, yet the S&P 500 sits less than 3% below its all-time high — AI-driven profit growth and resilient consumer spending are absorbing the rate shock.
Yields at 5% — why hasn't the market cracked?
The 10-year U.S. Treasury yield climbed to 5.04%, its highest since October 2023.
Historical comparison: the brief breach of 5% in 2023 triggered only a mild pullback; in 2007, when yields stayed above 5%, the S&P 500 fell nearly 5% within two months — and dropped further afterward.
This means → a 5% yield doesn't automatically trigger a crash. What matters is how long it stays there and whether the economy holds up.
How can AI earnings offset higher rates?
Higher rates typically punish growth stocks — the present value of future profits shrinks as the discount rate rises. In plain terms = a higher rate "marks down" tomorrow's earnings to a smaller number today.
Yet Apple and Microsoft remain near record highs. S&P 500 constituents are expected to post 53% year-over-year Q2 earnings growth — 49.5% excluding energy. Full-year 2026 profit growth is forecast at 35%, far above last year's 14%.
In plain terms = rates are discounting future profits harder, but AI is making those profits grow so fast that even after the discount, the number is still bigger than before.
Alphabet and Amazon reported strong cloud-computing growth, with adjusted earnings up 35% — the main engine behind the acceleration.
Chip stocks pulled back — peaking or opportunity?
Semiconductor shares retreated recently on concerns that U.S. domestic AI investment could slow.
But Laura Cooper, global investment strategist and head of macro credit at Nuveen, said: "We favor adding to semiconductors — we think memory-chip supply and demand will tighten further next year."
This means → the short-term dip reflects sentiment, not fundamentals. Institutional money is still betting on a supply-demand squeeze over the longer term.
Just how resilient is the economy?
August job growth accelerated sharply; leisure and hospitality employment rebounded after two consecutive monthly declines.
Consumer-spending growth was revised up to 3.4% from an initial 3.2% — personal consumption accounts for roughly two-thirds of U.S. economic activity.
Aberdeen analysts noted: "Many investors have spent three years waiting for a recession and instead got slower but still positive growth."
This reflects a market that repeatedly priced in an imminent downturn, only to be proven wrong each time — and that is the bedrock supporting equities' resilience.
Small caps outperformed — will higher rates kill the momentum?
The Russell 2000 small-cap index has clearly outperformed the S&P 500 year-to-date, driven by strong earnings and demand for exposure beyond mega-cap tech.
But smaller companies typically rely on external financing and are more rate-sensitive — the index has fallen more than 5% from its mid-August high.
This means → whether yields pull back after the Fed's rate decision this week is the pivotal test for small-cap momentum going forward.
市场有风险，内容仅供研究参考，不构成投资建议。