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The S&P 500 set a new record on October 6, 2026, even though Treasury yields had risen during the year. The main reason: expected corporate profits and profit margins strengthened enough to outweigh pressure from lower valuation multiples. Improved investor sentiment and enthusiasm for AI also supported stocks, according to the Federal Reserve’s July report. That explains how the forces could coincide; it does not mean higher rates are harmless or that a record predicts future returns.

What happened on October 6?

The S&P 500 rose 0.6% on Tuesday, October 6, 2026, topping its previous all-time high from August, the Associated Press reported. The index was still hovering around that latest record in mixed trading on October 12, according to a follow-up AP report.

A record is a result for the index, not proof that every stock rose. The S&P 500 is weighted by company size, so large technology companies can have an outsized effect on its level. AP noted their influence as markets weighed energy prices and inflation.

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Why rising yields usually put pressure on stock valuations

A share price reflects investors’ expectations for future company cash flows and the rate used to discount those cash flows into today’s dollars. When Treasury yields rise, future profits are generally worth less in present-value terms, and bonds may become more attractive relative to stocks. Those forces can put downward pressure on stock valuations.

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But yields do not mechanically determine the market’s direction each day. If investors expect companies to earn substantially more, or become more willing to take investment risk, those forces can offset some or all of the valuation pressure.

How earnings growth outweighed valuation compression

Carson Group’s October 8 analysis attributes the S&P 500’s year-to-date performance through October 6 to rising expected earnings, a lower forward valuation multiple and dividends. Its estimate assigns +29.0 percentage points to earnings growth, −14.8 points to the change in valuation multiple and +1.0 point to dividends, for a 15.2% total return. This is Carson Group’s attribution, not an independently audited index calculation.

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S&P 500 total return 15.2% through October 6, 2026
Earnings-growth contribution +29.0 percentage points through October 6, 2026
Valuation-multiple contribution −14.8 percentage points through October 6, 2026
Dividend contribution +1.0 percentage point through October 6, 2026
Next-12-month earnings per share estimate $404 on October 6, 2026, up 31.1% from $308 at year-end 2025
Forward profit margin 16.9% on October 6, 2026, versus 14.5% at year-end 2025
Forward price-to-earnings ratio 19.4 on October 6, 2026, down from 22.2 at year-end 2025

The pattern is the key: investors were expecting higher profits and margins, while paying a lower price per dollar of expected earnings than at year-end 2025. In Carson Group’s accounting, the increase in expected earnings more than offset the valuation drag. The analysis is an investment firm’s interpretation of market data; its figures should be read with that attribution.

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What the Federal Reserve reported about yields, earnings and AI

The Federal Reserve’s July 2026 Monetary Policy Report said nominal Treasury yields had risen since the start of the year through its July 2 data period: about 60 basis points for two-year Treasuries and about 35 basis points for 10-year Treasuries. A basis point is one-hundredth of a percentage point.

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Over the same report period, the S&P 500 equity price index was up about 9% from the beginning of 2026, while the information-technology industry group was up about 16%. The report linked the market recovery to strong corporate earnings and improved investor risk sentiment, and cited enthusiasm around AI-related developments and earnings growth in information technology. These observations provide context through July; they do not by themselves explain every move leading to the October record.

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What the record does—and does not—say

The 2026 record shows that stronger profit expectations and investor appetite for risk can outweigh the valuation pressure from higher yields over a particular period. It does not show that rates no longer matter, that gains were shared evenly across S&P 500 companies, or that the index will keep rising. The same resilient nominal growth that helps companies increase sales and profits can also coexist with inflation and tighter monetary conditions, leaving markets exposed to changing rate expectations.

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To assess whether the forces behind a record are continuing, watch expected earnings and margins alongside Treasury yields, valuation multiples, and how broadly gains are distributed across index constituents. A past return is evidence of what happened over its measured period, not a forecast of future performance.

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