US Markets Rose Despite Higher Treasury Yields

Investors navigated a complex landscape as strong corporate earnings countered rising interest rates.

Updated on Oct. 10, 2026 in Investing

Bold flat-color editorial illustration of stacked industrial server vents, evoking the technical foundations of current corporate market growth. — US markets trended upward in September 2026 as strong corporate earnings and robust AI spending offset the impact of climbing 10-year Treasury yields. AI Illustration. Upload story photo >

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The US stock market gained $2.5 trillion in value during September 2026, even as the 10-year Treasury yield climbed from 4.75% to 5.29%. This growth was supported by a 57% year-on-year increase in corporate net income for the second quarter of 2026.

Why it matters

Market resilience has been primarily fueled by robust corporate earnings and heavy artificial intelligence spending. These factors have bolstered confidence, despite the broader trend of nearly 65% of listed stocks declining in the third quarter of 2026.

US companies reported $904 billion in net income for the second quarter of 2026, a 57% increase year-on-year. Despite these gains, the expected return on stocks rose to 8.99% as investors adjusted to shifting yield environments.

The players

Aswath Damodaran

A professor and finance expert who outlines investment strategies for AI-related holdings.

The details

Corporate capital expenditure reached $133.4 billion in the second quarter of 2026, with artificial intelligence investment driving growth above 50% in the technology sector. Investors are currently balancing these massive outlays against high interest rates, leading to strategies such as betting on AI developers while shorting businesses vulnerable to technological disruption. With 63% of earnings returned to shareholders, companies are maintaining cash distribution despite significant reinvestment needs.

Corporate net income reached $904 billion in Q2 2026.
Nearly 65% of listed stocks declined in value during Q3 2026.
US markets experienced record-setting performance in September 2026.
Earnings forecasts have been raised for 2027 and 2028.

Money Landscape

The current market climate follows the intense 2026 technology capital expenditure surge, which has shifted how capital is allocated across the US economy. This reliance on earnings growth to offset rising yields mirrors previous cycles where corporate performance was the primary anchor for valuations.

Rising Treasury yields and market sector divergence mean that passive investors tracking the S&P 500 may see different outcomes than those focused on specific AI-related holdings. Consider reviewing your asset allocation with a qualified financial professional to ensure your risk profile matches the current yield environment.

The takeaway

The broad US market has remained resilient despite higher yields, largely due to strong corporate earnings and focused AI investment. Monitor your portfolio's concentration in high-growth tech sectors and discuss whether your current exposure aligns with your long-term financial goals.