Nasdaq Hits Record as Nvidia Nears 6 Trillion Amid Soaring Bond Yields

The Nasdaq closed at a new high on Monday, while Nvidia neared a $6 trillion valuation, even as long-term bond yields reached their highest levels since 2007. Deutsche Bank warned that this divergence between stock and bond markets cannot last indefinitely.

Wall Street opened the week with a stark contrast: major indices hit record closes, but bond yields surged to multi-decade highs. The Nasdaq gained 1%, the S&P 500 rose 0.7%, and the Dow Jones added 0.2%. Nvidia, the world's most valuable chipmaker, hit an all-time high, edging closer to a $6 trillion market cap. Meanwhile, US 10-year Treasury yields climbed to around 5.3%, and 30-year yields reached about 5.6%. Deutsche Bank noted that bonds are signaling higher yields and faster rate hikes, while equities show little stress.

Nvidia's rally has been a key driver of the market's resilience, fueled by strong AI demand and doubling revenue in its latest quarter. The company's stock was further boosted by a $150 billion share buyback expansion and an upgrade from Morgan Stanley. The broader chip sector also performed well, with Micron beating revenue expectations. However, analysts warn that the rally has been narrow, with money rotating toward AI and tech infrastructure at the expense of other sectors.

The weak September jobs report, which showed payrolls rising by just 29,000, reduced expectations of a Fed rate hike in October and helped stocks rebound. However, the bond market did not fully join the celebration, with yields continuing to rise. Deutsche Bank highlighted that higher real yields raise the discount rate applied to future profits, making large technology stocks more vulnerable to a repricing.