Published: October 5, 2026

Nasdaq Hits Record High as AI Stocks Rally and Fed Rate Hike Bets Fade

U.S. stocks started the first full week of October with investors balancing strong momentum in technology shares against elevated Treasury yields, oil prices and renewed concerns about global government debt.

The Nasdaq Composite reached another record high on Monday as major technology stocks including $NVDA, $META, $MSFT and $TSLA moved higher. The S&P 500 also gained, while the Dow Jones Industrial Average was little changed.

At the same time, investors are preparing for the release of the Federal Reserve’s September meeting minutes and the beginning of the third-quarter earnings season.

The market is entering an important stretch of the year, with monetary policy, corporate earnings, artificial intelligence investment and geopolitical risks all competing for investors’ attention.

Nasdaq Reaches Another Record High as Technology Stocks Lead

Technology stocks remained the primary driver of the broader market rally on Monday.

The Nasdaq Composite was up roughly 0.8% during morning trading and reached another all-time high. The S&P 500 gained about 0.5%, while the Dow was slightly lower. (London South East)

Nvidia ($NVDA) continued to attract significant attention after reaching a record high during Friday’s trading session. Shares were higher again Monday as investors continued to favor companies positioned to benefit from sustained artificial intelligence spending.

Meta Platforms ($META), Microsoft ($MSFT) and Tesla ($TSLA) also moved higher, with the three stocks gaining between roughly 1.6% and 2.4% during morning trading, according to Reuters. (London South East)

The continued strength of AI-related stocks is notable because long-term Treasury yields remain elevated. Higher yields can put pressure on high-growth stocks because future earnings become less valuable when discounted at a higher interest rate.

For now, however, investors appear willing to look beyond that pressure as expectations for AI-related revenue growth remain strong.

Weak Jobs Data Changes the Federal Reserve Outlook

One of the biggest market developments heading into Monday was last week’s weaker-than-expected employment report.

U.S. payrolls increased by only 29,000 in September, well below expectations, while the unemployment rate increased to 4.2%. Payroll figures for the previous two months were also revised lower. (Yahoo Finance)

The weaker labor market has significantly reduced expectations for another Federal Reserve rate hike in October.

Market pricing now puts the probability of the Fed keeping rates unchanged at its October 28 meeting at roughly 80% to 82%, compared with only about 29% a week earlier. (Barron’s)

That shift has been positive for stocks because investors generally prefer a less aggressive interest-rate environment.

However, the bond market is sending a more complicated signal.

The 10-year Treasury yield remained around 5.3% on Monday. That is unusually high even as expectations for an October rate hike have declined. (London South East)

This suggests that investors are worried about more than Federal Reserve policy. Heavy government borrowing, Treasury issuance, inflation risks and demand for longer-term bonds are also contributing to elevated yields.

Treasury Yields Remain a Major Risk for Stocks

The strength of the stock market is becoming increasingly dependent on whether equities can continue absorbing higher borrowing costs.

The 10-year Treasury yield was around 5.28% to 5.33% during Monday trading. (Schwab Brokerage)

Normally, higher yields can create pressure for growth stocks because investors can earn more from relatively low-risk government securities.

That creates an unusual market setup.

Technology stocks are rallying because investors expect strong earnings and continued AI investment, while the risk-free interest rate used to value those companies remains historically elevated.

So far, earnings expectations appear to be winning that battle.

Goldman Sachs analysts expect the median S&P 500 company to post approximately 9% year-over-year earnings growth in the third quarter, while overall expectations remain optimistic heading into earnings season. (London South East)

That makes corporate earnings one of the biggest potential catalysts for stocks during October.

Third-Quarter Earnings Season Moves Into Focus

The next major test for the stock market will be whether corporate earnings can justify current valuations.

Several companies are scheduled to report results this week, including Constellation Brands ($STZ), Levi Strauss ($LEVI), PepsiCo ($PEP) and Delta Air Lines ($DAL). (Investopedia)

These reports will give investors an early look at consumer spending, pricing power, travel demand and corporate cost pressures.

The earnings calendar becomes particularly important because investors have already pushed major indexes close to or above record levels.

Strong results could reinforce the current rally. Disappointing earnings, particularly from large technology companies later in the quarter, could make elevated valuations more difficult to defend.

Investors will also be watching management commentary for signs that higher energy prices, wages, interest expenses or tariffs are beginning to affect margins.

Nvidia and AI Remain at the Center of the Market

Nvidia ($NVDA) continues to be one of the most important stocks for the overall market.

The company has benefited from enormous demand for AI infrastructure, and investors are increasingly looking beyond semiconductor sales toward the broader AI ecosystem.

Nvidia recently announced a $150 billion expansion of its stock buyback authorization, another indication of management’s confidence in the company’s financial position and long-term outlook. (Investopedia)

The company’s performance also has an outsized impact on market indexes because of its enormous market capitalization.

The broader AI trade is extending beyond Nvidia. Cerebras Systems gained sharply Monday after OpenAI CEO Sam Altman described the chip designer as a close partner and discussed the companies’ work together. (London South East)

The development highlights how investors continue to search for companies that could benefit from the next stage of AI infrastructure spending.

$PTC Deal Highlights a Strong M&A Market

Technology stocks were not the only source of market momentum Monday.

PTC ($PTC) surged after Schneider Electric agreed to acquire the software company in an all-cash transaction valued at approximately $22.6 billion. PTC became one of the strongest performers in the S&P 500 during the session, gaining more than 30%. (AP News)

RXO ($RXO) also rallied after C.H. Robinson Worldwide ($CHRW) agreed to acquire the transportation broker in a stock-and-cash transaction valued at approximately $5.8 billion. RXO shares gained more than 20%, while $CHRW fell sharply. (London South East)

The transactions add another theme to the current market: companies and investors are willing to deploy substantial capital despite elevated interest rates.

A strong M&A environment can also signal confidence among corporate buyers that economic conditions and future earnings justify large investments.

Oil Prices Stay Near $100 as Geopolitical Risks Persist

Oil remains another major factor for financial markets.

Brent crude was trading close to $100 per barrel Monday, while U.S. West Texas Intermediate crude was around $90 per barrel. Oil prices eased somewhat but remained elevated amid concerns about disruptions to Gulf energy infrastructure. (London South East)

Higher oil prices create a challenge for the Federal Reserve and investors because they can increase inflationary pressure while also raising costs for consumers and businesses.

The recent decline in oil prices provided some relief to the bond market Monday, helping push the 10-year Treasury yield slightly lower earlier in the session. (Barron’s)

However, continued geopolitical uncertainty means energy prices could quickly become a larger market issue.

Global Markets Face Pressure From European Debt Concerns

The U.S. market’s strength stands in contrast with growing concerns about European government finances.

The euro fell to its weakest level against the dollar in roughly 17 months as investors reacted to political and fiscal concerns in France and other European markets. French stocks also came under pressure. (Reuters)

The spread between French and German 10-year government bond yields also widened, reflecting increased concern about France’s fiscal position.

For U.S. investors, the situation matters because global bond-market stress can influence Treasury yields, currency markets and overall risk appetite.

The stronger dollar can also affect multinational U.S. companies because overseas revenue becomes less valuable when converted back into dollars.

What Investors Should Watch Next

The stock market enters the second week of October with several major catalysts approaching.

The Federal Reserve’s September meeting minutes are scheduled for Wednesday and could provide additional clues about the central bank’s thinking on interest rates. (Investopedia)

Investors will also receive additional economic data and the first meaningful wave of third-quarter earnings.

The key question is whether strong corporate earnings and continued AI investment can keep stocks rising while Treasury yields remain elevated.

For now, the answer appears to be yes.

The Nasdaq is making new highs, major technology companies continue to lead the market and expectations for an October Fed rate hike have fallen sharply.

But the market is also becoming more dependent on earnings growth to justify current valuations. If companies deliver strong results, the rally could gain another source of support. If earnings or guidance disappoint, high Treasury yields could make the market more vulnerable to a pullback.

For investors, October is shaping up to be a month where AI spending, interest rates, corporate earnings, oil prices and government debt all collide.

The direction of those five forces could determine whether the stock market’s record-setting run continues through the final quarter of 2026.

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