Market snapshot: Wall Street illustrates current conundrum
Without resolution, consistent themes have kept most global financial markets rangebound for the past five months. ii's head of markets has the latest.
29th September 2026 08:28
by Richard Hunter from interactive investor
US markets buckled once more under the weight of rising bond yields as general inflationary concerns persist.
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Both the 10-year and the 30-year US Treasury yields moved to new multi-decade highs, which in turn could attract investors as fixed income becomes increasingly competitive with equities as a source of capital for the insatiable appetite of AI demand. By the same token, this demand is driving rapid growth in global prices for technology-related goods, itself a further source of inflation.
The current conundrum is indeed best illustrated in the US. The economy is in good shape which means that this strength could be enough to offset a data centre build-out boom which is not only lifting growth and employment, but also commodity prices and the cost of goods.
There is therefore the possibility that the higher for longer interest rate backdrop which is currently being priced in is one which investors are beginning to accept as inevitable. Comments from the Treasury Secretary at the weekend suggested that the Federal Reserve should nonetheless keep an open mind on rates, since the eventual productivity gains expected from AI should keep inflation in check over the medium term.
In the meantime, the stocks related to this new wave are never far from the news, even though sentiment around the AI trade has swung over recent months, and the upcoming IPO of Anthropic will provide a further test of appetite.
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Such stocks were generally weaker yesterday after a strong week of gains, with declines of around 3.5% for the likes of Advanced Micro Devices Inc (NASDAQ:AMD) and Micron Technology Inc (NASDAQ:MU), while Meta Platforms Inc Class A (NASDAQ:META) dropped by 5%, giving up a fraction of its recent gains following the excitement surrounding its new AI agent Muse. NVIDIA Corp (NASDAQ:NVDA) rose by almost 2% after announcing an additional $150 billion share buyback programme, as well as unveiling a new security platform which it claims can prevent AI agents from going rogue.
On the economic front, this is a busy week which will test interest rate expectations once more. Today’s US consumer confidence release is in addition to the August jobs and labour turnover survey, while as the week progresses there could be further tensions emanating from the Personal Consumption Expenditure (PCE) index – the Federal Reserve’s preferred measure of inflation - and the non-farm payrolls report on Friday.
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The August PCE is expected to rise to 0.4% from 0.2% month over month although unchanged year over year at 3.7%, while 100,000 jobs are expected to have been added in September, as compared to 162,000 in August, with the unemployment level unchanged at its 4.1% rate.
A poor start to the week has nonetheless done little to arrest the general direction of travel for the main indices. In the year to date, the Dow Jones remains ahead by 7.1% and the S&P500 by 12.2%, with the Nasdaq continuing its ascent to stand 15.4% higher and close to record levels.
Aside from the investor buzz surrounding the housebuilding sector, the main indices had a relatively lacklustre start to the week and opened today in similar fashion. Miners were a source of some strength, with Antofagasta (LSE:ANTO) and Anglo American (LSE:AAL) at the top of the leader board, closely followed by Fresnillo (LSE:FRES) and Endeavour Mining (LSE:EDV) which tracked the gold price higher. AstraZeneca (LSE:AZN) rose by more than 1% after announcing an agreement to invest in US company Summit Therapeutics which broadens its oncology portfolio.
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Less positively, Rentokil Initial (LSE:RTO) dipped by more than 2% after a broker downgrade. The expected announcement from the Prime Minister later today that he will look to reduce energy costs weighed on the sector, with losses of up to 2% for the likes of Ithaca Energy Ordinary Share (LSE:ITH), National Grid (LSE:NG.), SSE (LSE:SSE) and Centrica (LSE:CNA).
Nonetheless, these moves were not quite enough to offset a cautiously positive tone at the open which leaves the FTSE100 ahead by 7.9% and the FTSE250 by 8.5% so far this year.
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