Analysis
The Nasdaq Hit a Record on the Same Day the 10-Year Yield Reached Its Highest Since 2002
The Nasdaq Composite closed at a record 27,477 on October 5, while the 10-year Treasury yield closed at 5.31%, its highest since April 2002. Normally those two things don't happen together.
Two records were set on Wall Street on Monday, October 5, and they point in opposite directions. The Nasdaq Composite rose 1.05% to 27,477.31, a record close, after touching an intraday record of 27,544.06. The S&P 500 gained 0.66% to 7,773.95, just 0.32% short of its August 13 record close of 7,798.99. Meanwhile, the yield on the 10-year US Treasury note closed at 5.31%, up from 5.28% on Friday and 4.16% at the end of 2025. It hasn't closed higher since April 2002.
Why does that combination stand out? In theory, higher bond yields are a headwind for stocks, and especially for the technology-heavy Nasdaq. When a risk-free government bond pays more than 5%, investors demand more from riskier assets, and the future profits of fast-growing companies — much of whose value lies years ahead — are discounted more heavily. The 2022 bear market was a textbook example: as yields climbed, the Nasdaq fell about a third. This year the opposite has happened. Since the end of 2025, the Nasdaq Composite is up about 18% and the S&P 500 about 14%, even as the 10-year yield has risen more than a full percentage point.
There are a few ways to read that. Yields can rise for 'good' reasons — stronger growth and higher expected profits — which can support stocks at the same time. They can also rise for less comfortable reasons, such as investors demanding more compensation for inflation risk or for holding long-term debt at all. The price data can't tell us which explanation is right. What it can tell us is that the cushion between stocks and bonds is thinner than it has been in a long time: with a 10-year yield above 5.3%, a bond investor is getting a return that, for most of the past two decades, would have been considered unusually generous.
For now, the market's mood is calm rather than euphoric. The VIX volatility index finished Monday at 15.52, close to its lowest levels of recent weeks, and the rally was broad enough that the small-cap Russell 2000 also rose 0.5%. The question traders will be watching is whether yields keep climbing. A 10-year yield moving decisively above its Monday intraday high of 5.35% would test how much further stocks can rise while ignoring it. Our new guide explains how bond yields and stock prices are connected, and why the link sometimes breaks.