Wall Street's AI rally holds at records even as long-term Treasury yields reach levels last seen in 2002, Bloomberg reports

Bloomberg's Carmen Reinicke wrote on 4 October that investors' enthusiasm for AI is outweighing the threat from rising interest rates. The Nasdaq 100 hit a record on Friday 2 October and is up 22% this year, and the S&P 500 is less than 1% from the all-time high it reached in August. Microsoft, Nvidia and Apple were the largest point contributors to both indexes' gains over the last three months.

The rates side is the worry. “Just last week, the long bond yield reached 5.69% and the 10-year rate topped 5.3%, something neither has done since 2002,” the article says. Higher yields make future profits worth less today, which hits richly valued technology shares hardest.

The bull case rests on third-quarter earnings. Bloomberg Intelligence expects technology-sector earnings per share to rise by more than 65%, against more than 24% for the S&P 500 as a whole.

The fund managers quoted are uneasy. “With these higher rates, all of us are on edge,” said Ken Mahoney, chief executive of Mahoney Asset Management. “If 10-year yields go to 6%, we're going to have a different conversation,” said Chris Galipeau, head market strategist at the Franklin Templeton Institute.

This is market reporting, not an issuer's document, so every figure is Bloomberg's. The point for anyone holding AI shares: the rally now depends on earnings season delivering while borrowing costs sit at a 24-year high.

• Reported The long bond yield reached 5.69% and the 10-year topped 5.3% last week, levels neither had reached since 2002. Bloomberg via Yahoo Finance
• Reported The Nasdaq 100 hit a record on Friday and is up 22% this year; Microsoft, Nvidia and Apple were the largest contributors over three months. Bloomberg via Yahoo Finance
• Reported Bloomberg Intelligence expects Q3 tech-sector EPS to rise more than 65%, against more than 24% for the S&P 500. Bloomberg via Yahoo Finance