Wall Street Rally Defies Logic as Bond Yields Surge

Stocks and bond yields are supposed to move in opposite directions. Wall Street is ignoring that rule.

The S&P 500 closed at a record near 7,209, and the Nasdaq touched 24,892. This comes as the 10-year Treasury yield climbed from 3.97% to 4.45%, and the 30-year yield has breached 5%.

The AI trade is leading the charge. The iShares Semiconductor ETF rose 2.39%, with Intel, Nvidia, and Qualcomm posting significant gains. The broader economy is also cooperating, giving investors confidence to stay in risk assets.

Under the surface, the rally is narrowing. Fewer stocks are participating, and volume is declining. Traders now see a 30% probability of a Federal Reserve rate hike by December.

Bitcoin and risk assets are holding up despite higher bond yields, suggesting traders are pricing in continued economic resilience rather than a rate-driven selloff. The crypto correlation with the Nasdaq remains key.