Wall Street closed out the week higher, with gains in Microsoft and other artificial-intelligence-linked technology stocks outrunning a fresh surge in Treasury yields and a jump in oil prices. The S&P 500 rose 0.51% Friday to 7,743.41, the Nasdaq Composite added 0.48% to 27,068.72, and the Dow Jones Industrial Average climbed 478.64 points, or 0.93%, to 51,828.62. For the week, the S&P 500 gained 1.2% and the Nasdaq rose 2%, having closed at a record earlier in the week.
Microsoft led the tape, rallying 3.7% after unveiling a batch of new capabilities for its Copilot app, including a coding tool and an "always-on" AI agent, lifting its 2026 gain to 7%. Apple climbed more than 1% to a record closing price. Akamai Technologies rose 3% on news of a multiyear deal with Anthropic, one of several AI-infrastructure tie-ups investors have rewarded this year.
Yields at Levels Not Seen in Decades
The rally came despite a bond market that is sending a starkly different signal. The 10-year Treasury yield hit 5.225%, its highest since 2007, while the 30-year yield reached 5.502%, a level last seen in 2004. The move follows the Federal Reserve's decision on September 16 to raise its benchmark rate a quarter point, to 3.75%-4%, its first hike since 2023 and a reversal of the easing cycle that had delivered five cuts between late 2024 and the end of last year. The committee cited persistently elevated inflation; officials now see the rate ending the year in a 4.1%-4.4% range, up from a prior 3.6%-4.1% estimate.
Oil added to the crosscurrents earlier in the week before easing back Friday, with West Texas Intermediate crude falling 2.33% to $92.41 a barrel and Brent slipping 2.14% to $104.32, as traders weighed the possibility that the Strait of Hormuz could reopen to fuller shipping traffic after months of disruption tied to the conflict between the U.S. and Iran.
"Geopolitical risk and bond market volatility continues to roil markets, although Wall Street remains remarkably resilient amidst the tumult," said Kyle Rodda, an analyst at Capital.com, describing a market that has largely shrugged off higher borrowing costs so long as AI-linked earnings keep coming in strong.
The divergence leaves investors weighing two competing narratives heading into next week: whether long-term borrowing costs at multidecade highs eventually catch up with equity valuations, or whether AI-driven earnings growth can keep outrunning them, as it has for most of the past two months.