If a bruising third quarter can’t halt Wall Street, what can?
SPY•The S&P 500 rose 2% in the third quarter, despite rising oil prices and bond yields, while the 10-year Treasury yield climbed more than 85 basis points. Market breadth was narrow, and investors face questions about further rate hikes and elevated AI-related risks.
1. Stocks rose despite headwinds
U.S. and global stocks reached record highs during the third quarter despite a 40% rebound in Brent crude, record-high diesel prices and bond yields at 20-year highs. The S&P 500 gained 2%, while about 40% of its stocks were down for the year and a quarter had fallen at least 10%.
2. Rising yields and debt
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. U.S. debt passed $40 trillion in August, and investment-grade and high-yield corporate bonds recorded their largest quarterly losses since 2022. The article links much of the credit pressure to heavy AI-related borrowing.
3. Investors watch rate outlook
Market pricing put the likelihood of an October rate hike at roughly 50%, while the bond market indicated the Federal Reserve had more work to do. The article said investors may get a clearer picture as third-quarter earnings season begins in the coming weeks.
