Nasdaq Hits Record Highs Amid Strong Dollar and Rising Yields

The Nasdaq Composite and Nasdaq 100 closed at record highs, leading U.S. stocks higher despite rising longer-term Treasury yields and a stronger dollar. The economic landscape remains a delicate balance, with Friday’s softer jobs report easing immediate Fed rate hike concerns, but today’s ISM services report indicating persistent demand and price pressures. Stocks benefited from growth expectations, though the risk of stubborn inflation and higher borrowing costs looms.

The dollar gained against most major currencies, with the largest increase against the New Zealand dollar and the Australian dollar as the only exception. The euro faced additional pressure due to France’s fiscal and political uncertainties, further weighing on its value. Treasury yields showed a split, with the short end easing but longer-term yields climbing, posing challenges for stock valuations and financing costs.

All five major U.S. indices finished higher, with the Nasdaq Composite and Nasdaq 100 setting new records. European markets were mixed, with France’s CAC 40 lagging due to country-specific issues. The ISM Services PMI came in slightly below expectations but remained above 50, signaling continued growth and accelerating prices. Crude oil reversed earlier gains, settling lower after conflicting reports on Saudi energy infrastructure.

Looking ahead, the next test for stocks is maintaining strength while the 10-year yield holds above 5.30%. Key factors to watch include the dollar’s broad gains, France’s borrowing-cost pressures, and Middle East headlines. Wednesday’s Fed minutes will provide further insight into how officials are balancing softer employment data against persistent inflation.