Nasdaq Closes at Record as AI Leaders Lift Tech Despite 5.31% 10-Year Yield

The Nasdaq climbed 1.06% to 27,477.31, setting a new record, while the S&P 500 added 0.67%. Nvidia and Broadcom each gained about 2.1%, and other mega-cap tech names including Microsoft and Meta also supported the advance. The rally came even as the 10-year U.S. Treasury yield rose to around 5.31%, its highest level since 2002. Elevated yields typically weigh on technology shares by lowering the present value of long-dated earnings and offering investors a more attractive risk-free alternative. This dynamic usually hits tech particularly hard because valuations often hinge on profits expected years out. AI-driven earnings momentum is offsetting much of that valuation headwind. Heading into the third-quarter reporting season, investors expect S&P 500 profits to rise by more than 30% year over year, with AI-exposed companies contributing an outsized share of the growth. That follows a period in which technology earnings and AI-related spending have repeatedly exceeded analyst expectations. Recent updates from Micron, Nvidia and the largest cloud providers have strengthened the view that AI infrastructure demand is translating into revenue, not just speculation. In that environment, faster profit growth can counteract the impact of a higher discount rate. Policy-rate fears have also eased. A weaker-than-expected U.S. jobs report reduced expectations for another Federal Reserve rate hike in October, with the implied probability falling from roughly 70% to 24%, according to Reuters. That shift has offered growth stocks some near-term support even as long-term yields remain high. Oil prices added to the tailwind. Brent moved back toward $100 as Middle East exports increased, easing concerns that another energy shock could push the Fed toward a more aggressive inflation stance. Breadth, though, remains a clear weak spot beneath the Nasdaq's record. On Monday, only about 31.5% of Nasdaq stocks traded above their 50-day moving averages, while only around 27% of S&P 500 constituents were above theirs. The figures echo September's split, when large-cap technology rose even as most stocks fell.