U.S. stocks have continued to rise even as interest rates and bond yields moved higher. The case for resilience is strong corporate earnings and economic activity; the risks are inflation, more competitive bond yields, rich valuations and uncertainty over whether AI-related investment will produce lasting profits. That is an explanation of the rally, not evidence that stocks are insulated from rates or a forecast that gains will continue.
What does “soldier on through adversity” mean?
MoneyWeek’s 2 October 2026 article describes a market that advanced despite higher interest rates and bond yields. Its figures put the S&P 500 up 12% year to date and the Nasdaq 100 up about 20%, but the article passage does not specify the exact measurement date or whether these are price or total returns. They should not be read as closing returns on 2 October. S&P Dow Jones Indices reported S&P 500 price returns of 13.18% year to date as of 3 September and 12.28% as of 31 August 2026—dated observations, not October 2 figures.
The point is that rising yields did not prevent stocks from gaining over the periods described. It does not mean higher yields are harmless: they can make bonds more attractive relative to shares and raise the discount rate investors apply to future company profits.
What supported the 2026 rally?
Reported corporate earnings
Strong earnings are the central support in the article’s argument. MoneyWeek reported 50% year-over-year S&P 500 earnings growth in the second quarter of 2026. In a separate 25 September review, S&P Global Market Intelligence reported that 78% of S&P 500 companies beat second-quarter earnings-per-share estimates and that earnings grew 53% year over year. Those are different publishers’ figures; their coverage and calculation conventions are not reconciled, so the percentages should not be combined or treated as interchangeable.
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Beating estimates can help shares even when valuations are high, because investors are responding to results relative to expectations as well as to the absolute level of profit. But one quarter of strong reported growth does not establish that the same pace will persist.
Economic activity and investment
MoneyWeek also pointed to an expanding U.S. economy and investment associated with artificial-intelligence infrastructure. It cited an Atlanta Fed GDPNow estimate of 5% annualized growth for the third quarter of 2026 and a PMI activity reading at a five-year-plus high. Those observations are reported by MoneyWeek; without the dated underlying releases, they should not be treated here as independently verified readings.
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The article describes gains as extending beyond technology: it says energy, banks and industrial companies also benefited from their own conditions or from data-center investment. That is MoneyWeek’s account, not a separately established sector-return comparison.
Why rising bond yields remain a threat
When government bond yields rise, investors can earn more from bonds, potentially reducing the relative appeal of stocks. Higher yields can also lower the present value of expected future earnings, with greater sensitivity for companies whose expected profits are far in the future. If inflation remains persistent, investors may also expect interest rates to stay higher or rise further.
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Scan for outdated or missing drivers - takes under a minuteDriver Scan →Clear out junk files and repair common Windows errorsFree Scan →Fix the driver behind crashes, sound loss and screen glitchesFind Drivers →MoneyWeek reported that the S&P 500’s forward price-to-earnings multiple had fallen from 23 a year earlier to 19. The source series and calculation method for that comparison are not established in the available material, so it is best understood as MoneyWeek’s reported valuation measure, not a confirmed index-provider statistic. A lower multiple may signal less willingness to pay for each dollar of expected earnings; it does not, by itself, show that shares are cheap or that a decline is imminent.
The article offers three possible explanations for the lower multiple: doubt that the AI spending boom will deliver durable profits, concern that inflation could push rates higher, and bond yields becoming more competitive with equities. These are plausible interpretations, not a quantified explanation of the change.
What could change the market’s direction?
The competing forces make the rally conditional rather than self-explanatory. The most useful questions to watch are:
- Earnings durability: Do companies continue to deliver profits that support current prices, or does growth slow?
- Inflation and policy: Does inflation ease enough to reduce pressure on interest rates, or does it keep borrowing costs elevated?
- Bond yields versus equity valuations: Do yields make bonds sufficiently attractive that investors demand a lower price for stocks?
- AI returns: Does spending on chips, data centers and related infrastructure translate into lasting revenue and profit, rather than simply high capital outlays?
S&P Global Market Intelligence’s September review also described late-summer volatility linked to renewed U.S.–Iran hostilities, oil prices, Treasury yields and inflation concerns. These factors show how geopolitical and commodity developments can feed into the same inflation and rate questions investors are weighing.
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What the historical comparisons can—and cannot—show
MoneyWeek compares the present with the 1994 surge in yields and the late-1990s technology boom. In its account, an initial 8% decline in the 1994 episode was followed by recovery as earnings held up. It also reports that the market later fell 49% from its 2000 peak after the dotcom-era rally. These historical figures are MoneyWeek’s reported calculations, not independently verified here.
The examples make opposing points: rising yields do not mechanically dictate the market’s next move, and a strong rally can still precede a severe reversal. They cannot establish which outcome current markets will follow.
How to read the rally without turning it into a forecast
The evidence described by MoneyWeek and S&P Global Market Intelligence supports a specific conclusion: reported earnings strength and economic activity helped U.S. shares rise despite higher yields. It does not prove that earnings will remain strong, that AI investment will pay off, or that inflation and bond yields will stop weighing on valuations. Treating the rally as proof of immunity to rates would go beyond what these figures show.
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