TLDR
- The S&P 500 and Nasdaq both reached fresh record highs on Tuesday despite the 10-year Treasury yield staying above 5%.
- Strong corporate earnings growth, expected above 30% year over year, is helping offset the pressure from high yields.
- Nvidia’s market value is nearing $6 trillion as AI-related spending continues to drive gains.
- All 11 S&P 500 sectors rose Tuesday, showing the rally is spreading beyond big tech names.
- Analysts are split, with some forecasting the S&P 500 could reach 10,000 by the end of the decade while others warn it could fall to 5,000 by 2027.
The stock market reached new records this week even though bond yields are sitting near multi-decade highs. On Tuesday, the S&P 500 and Nasdaq both touched fresh all-time highs. The Dow also closed higher.
At the same time, the 10-year Treasury yield remains above 5%. It recently touched levels not seen since 2002.
Normally, high bond yields hurt stock prices. Investors can earn steady returns from government bonds instead of taking on risk in the stock market. This usually hits expensive technology companies the hardest.
This time, stocks are climbing anyway.
Strong Earnings Are Keeping Stocks Afloat
The main reason stocks keep rising is earnings growth. Analysts expect S&P 500 companies to post earnings growth above 30% compared to last year.
🔥BULLISH: S&P 500 hits a NEW ALL-TIME HIGH at 7,844.
SPX is up 0.8% as Wall Street bets on a huge AI-driven Q3 earnings season.
The index is now worth a record $71.3 TRILLION, up 24% from its March 30 low, helping push the total US stock market above $82 TRILLION.
That’s… pic.twitter.com/ZfiRr6V59C
— Coin Bureau (@coinbureau) October 6, 2026
AI companies remain the biggest driver of that growth. Nvidia shares rose again Tuesday, pushing the company’s market value close to $6 trillion.
Other chipmakers also gained as investors continue betting that spending on data centers and AI infrastructure will stay strong.
The rally is not limited to a few large tech names. All 11 S&P 500 sectors traded higher on Tuesday. Utilities and real estate performed well as bond yields eased slightly from their recent peak.
Why Treasury Yields Matter So Much
The 10-year Treasury yield recently hit around 5.34%, its highest level in about 24 years. Yields have climbed as investors worry about inflation, government borrowing and a strong economy.
S&P 500 just hit its 28th record high of 2026, crossing $71 trillion in market cap for the first time in history.
This is happening despite:
1. 10-year, 20-year and 30-year Treasury yields at 24-year highs
2. Inflation at 3.4%, above expectations
3. Mortgage rates at 7.28%,… pic.twitter.com/84aJu4GJNk
— Bull Theory (@BullTheoryio) October 6, 2026
Higher yields create a problem for stocks. If investors can earn over 5% from low-risk bonds, they have less reason to buy riskier shares.
Higher rates also raise borrowing costs for companies, consumers and the government. This matters most for growth stocks, since their value depends on profits expected far in the future.
When interest rates rise, those future profits are worth less today. So far, strong earnings have outweighed that pressure.
Some investors now wonder if 6% yields, rather than 5%, could become the real threshold where stocks start to struggle.
Forecasts for where stocks go next vary widely. The S&P 500 is approaching 8,000, and some strategists say it could reach 10,000 by the end of the decade.
Other analysts see a different outcome. Panmure Liberum recently said the S&P 500 could fall to around 5,000 by the end of 2027 if inflation and high rates persist.
That gap in forecasts shows how closely balanced the market is right now.
Investors will be watching third-quarter earnings, Federal Reserve comments, inflation data and Treasury yields in the coming weeks. A strong earnings season paired with easing yields could push the S&P 500 further past 8,000.
A combination of weaker earnings and rising yields would be the bigger risk.
For now, record stock prices show that investors still believe corporate profits can outpace the cost of higher borrowing rates.
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