If a bruising third quarter can’t halt Wall Street, what can?
SPY•The S&P 500 rose 2% in the third quarter and global stocks reached fresh record highs despite rising oil prices and bond yields. The 10-year U.S. Treasury yield climbed more than 85 basis points, while market breadth narrowed and corporate bonds posted their biggest quarterly losses since 2022.
1. Stocks advance despite risks
The S&P 500 rose 2% in the third quarter, following its strongest three-month period in six years, while U.S. and world stocks reached fresh record highs. Second-quarter corporate earnings growth was 53.7%, but around 40% of S&P 500 stocks were down for the year and a quarter had fallen at least 10%. Strategists described market breadth as the narrowest since 2000, with AI-related companies making up more than half of the index’s market capitalization.
2. Yields and debt weigh
The 10-year U.S. Treasury yield rose more than 85 basis points during the quarter, one of its largest quarterly increases in 50 years. Yields across most of the Treasury curve reached their highest levels since the mid-2000s, while U.S. investment-grade and high-yield corporate bonds recorded their biggest quarterly losses since 2022. U.S. debt crossed $40 trillion in August.
3. Investors watch rate outlook
The article says market pricing puts the likelihood of an October Federal Reserve rate hike at roughly 50%, while the bond market signals further rate increases may be ahead. Investors may get an indication of whether stocks can keep advancing as third-quarter earnings season begins in the coming weeks.
