Market snapshot: tech stocks enter record territory
Despite bond yields reaching multi-decade highs, share prices rallied on Wall Street overnight. ii's head of markets explains why.
6th October 2026 08:33
by Richard Hunter from interactive investor
The Nasdaq index hit a new record high as the buying frenzy around tech continued unabated even as bond yields rose again.
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Indeed, there is likely to be some correlation between the two apparently opposing factors. The sell-off in the bond market has been a global phenomenon and the reasons for it are legion. However, one element is likely to be that the monies being raised from such sales are being deployed elsewhere, and are finding a home not only in satisfying the voracious appetite of companies raising funds to build AI infrastructure through debt, but also by investing in these companies themselves.
As such, the businesses on the receiving end of this investment, usually companies with enormous cash flows and huge capital spend budgets, are somewhat outside of broader concerns around higher for longer interest rates. The need for capital remains strong and there have been any number of companies pointing to the fact that supply of AI components such as chips is far behind the current level of demand and as such could well continue to flow for the next year and beyond.
The latest surge in the Nasdaq was typified by further strength in the AI trade, with market darling – and heavyweight – NVIDIA Corp (NASDAQ:NVDA) rising by 2% and Tesla Inc (NASDAQ:TSLA), Meta Platforms Inc Class A (NASDAQ:META) and Microsoft Corp (NASDAQ:MSFT) by a similar amount, while Space Exploration Technologies Corp Class A (NASDAQ:SPCX) added more than 7% as it continues to claw back some of its post-IPO weakness.
Nor was this strength confined to the tech-heavy index, with the Dow Jones moving to within 0.2% of its recent record high and the benchmark S&P500 0.3%, bringing the gains in the year to date to 6.7% for the Dow, 13.6% for the S&P and 18.2% for the Nasdaq.
The rising tide has lifted other boats, such as the Russell 2000 which has added 13.5% so far this year despite the higher borrowing costs which tend to affect smaller companies in growth mode. A 9.5% gain for the S&P500 equalweight index is also a further reflection of broad equity strength ahead of the imminent third-quarter earnings season.
Meanwhile, the bond markets continue to react to a whole host of factors, with government indebtedness climbing slowly towards the top of the list. Another feature in firing yields to multi-decade highs has of course been the inflationary impact of an oil price which currently stands at around $100 a barrel, up by 39% since the start of the conflict and by 64% in the year to date.
There are also bond market purists who believe that the current level of yields in the US is of limited cause for concern both by historical standards, but also given the strength of the underlying economy and a consumer who continues to spend, despite the numerous confidence surveys which have tended to suggest otherwise.
The FTSE100 joined the global party and opened strongly Tuesday, led by heavyweights such as AstraZeneca (LSE:AZN). The drug company, the third-largest constituent of the primary index with a market cap of £186 billion, rose by almost 3% as it confirmed the opening of its newest global strategic research and development centre in Massachusetts in an effort to accelerate its pipeline alongside potential scientific breakthroughs.
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Buying interest was broadly based across a range of sectors as the index marched higher, taking its gain in the year so far to 6.6% and lessening the impact of some recent weakness.
As a global investment destination, the FTSE100 is not designed to shoot the lights out given its relatively light tech exposure, but has nonetheless proved its worth on a number of occasions this year as something of a haven in more volatile times elsewhere.
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