(Oct 6) : A rally in giant technology companies drove stocks higher, overshadowing concerns about still-elevated oil prices and bond yields.

The S&P 500 rose to a striking distance of a record while the Nasdaq 100 reached a fresh peak. Political upheaval in Europe and fiscal worries drove the euro to its weakest since May 2025. Longer-dated Treasury yields hit multi-decade highs. Brazilian assets soared as investor favorite Flávio Bolsonaro became the front-runner to win the presidential election runoff.

Markets have absorbed rising rates, high energy costs and renewed inflation concerns, with stocks continuing to advance. Strong earnings, consumer spending and sustained artificial intelligence-related investment have all kept growth intact, according to Principal Asset Management.

“There’s plenty for investors to worry about, but earnings continue to be the counterweight,” said Mark Hackett at Nationwide. “What’s encouraging is that the strength isn’t a fluke. We’re seeing a healthy combination of growth and margin expansion.”

Rates are becoming “more punitive” and expectations are high, but companies have outgrown those pressures, he said.

Investors have gotten too bearish on stocks, with earnings expected to remain robust and the surge in bond yields looking increasingly stretched, according to JPMorgan Chase & Co.’s Mislav Matejka.

“Relative equity-market calm amid the bond market’s ‘perfect storm’ is understandable, given accelerating economic growth and the AI boom’s rate insensitivity,” said Lisa Shalett at Morgan Stanley Wealth Management.

At Morgan Stanley, Michael Wilson noted that a drop in US stock valuations has left some areas looking attractive as earnings growth shows few signs of waning. The extent of the pullback has created a “better setup” for sectors linked to the economic cycle, he said.

“Equities have room to move higher over the next six to 12 months amid resilient economic growth and robust earnings,” said Ulrike Hoffmann-Burchardi at UBS Chief Investment Office. “But the path is unlikely to be smooth.”

Elsewhere, US oil dropped below US$90. President Donald Trump is preparing to ease limits restricting the use of a tax-exempt variety of diesel, his latest bid to pare costs for the essential fuel. 

Uploaded by Isabelle Francis