The S&P 500 snapped a two-week losing streak as technology stocks moved higher, helped by renewed optimism surrounding artificial intelligence and a meaningful, hopefully not-temporary decline in oil prices. At the same time, rising Treasury yields remain something investors should continue to watch.

Market Index Performance: Last Week and Year-to-Date

Market Overview: Technology and AI Provide a Lift

The technology-heavy NASDAQ reached record territory during the week as artificial intelligence once again provided a tailwind for stocks.

One of the catalysts was Meta, as optimism surrounding its AI agent, Muse, helped fuel enthusiasm for AI-related investments. Meta shares rallied sharply following early signs of success for the product.

Oil prices also retreated significantly during the week. That helped alleviate some of the inflation concerns that have weighed on both the stock and bond markets.

Most major equity indexes benefited, although small-cap stocks lagged. Smaller companies can be more sensitive to borrowing costs, and investors appear increasingly concerned about what persistently higher interest rates could mean for their future profits.

Treasury Yields Are Back in the Spotlight

While stocks generally finished the week higher, the bond market faced another difficult week. Treasury yields rose as investors digested stronger economic data, inflation concerns and continued questions surrounding the amount of debt that must be financed by the U.S. government.

Short- and longer-term U.S. interest rates are now at levels we have not experienced for many years.

There are several potential reasons.

Higher oil prices over the past several months have contributed to inflation concerns. The enormous amount of capital being invested in artificial intelligence has also resulted in substantial corporate bond issuance. Add the federal government’s significant borrowing requirements, and there is plenty of competition for investors’ dollars.

But I believe there may be another factor that deserves consideration:

Are Interest Rates Simply Reverting Toward More Normal Levels?

For more than a decade following the Great Recession, interest rates were influenced by extraordinarily easy monetary policy and significant Federal Reserve bond purchases.

Those policies helped push interest rates to historically low levels.

We may now be experiencing some degree of reversion toward longer-term interest-rate norms.

That doesn’t necessarily mean today’s yields are comfortable for borrowers—but it is worth remembering that the extremely low interest rates investors became accustomed to were not historically normal either.

Is a 5% Treasury Yield Bad for Stocks and the Economy?

At this point, I don’t believe we can automatically say yes.

Despite the sharp increase in market interest rates, the major stock indexes have remained relatively resilient. Corporate profits have also remained strong.

The bigger question may be what happens if rates continue substantially higher from here.

Continuously rising bond yields affect:

At some point, higher rates can begin competing more aggressively with stocks for investor dollars.

The next Federal Reserve meeting is scheduled for October 27–28, with the interest-rate decision coming on October 28.

Have Bond Yields Moved Too Far, Too Fast?

Markets have a tendency to overshoot.

We see it in stocks, and we see it in bonds—both higher and lower.

I believe markets would benefit from seeing interest rates stabilize sooner rather than later. Constantly rising yields create uncertainty throughout the economy, particularly for consumers, businesses and housing.

That does not necessarily mean interest rates need to fall dramatically. Stability itself would be helpful.

Mortgage Rates Above 7% Continue to Pressure Housing

The average 30-year mortgage rate has moved above 7%, creating another hurdle for prospective homebuyers.

Higher mortgage rates have a very simple effect: they reduce purchasing power.

The median sales price of new single-family homes has declined from its 2022 peak, although home prices remain above pre-pandemic levels.

Housing conditions also vary considerably by region. Parts of the West and Northeast have experienced greater weakness, while some areas of the South have remained stronger.

Locally, I continue watching the 55+ housing market closely. From what I see in our area, prices have remained relatively resilient, particularly when looking at how quickly homes are listed, sold and ultimately closed.

Is There a Silver Lining for Bond Investors?

Perhaps.

Rising interest rates are painful in the short term because existing bond prices generally decline when yields rise.

However, there is another side to the story.

Bond mutual funds and ETFs that reinvest their monthly distributions are now able to purchase additional shares at lower prices. As bonds within those portfolios mature, managers may also be able to reinvest the proceeds into newly issued bonds offering higher yields.

That means today’s higher rates can potentially improve a bond portfolio’s future income.

For long-term investors, higher yields eventually can become part of the solution—not simply the problem.

S&P 500 Sector Performance: A Look Beneath the Market

As we approach the final quarter of 2026, it is worth looking below the headline indexes to see where performance has actually been coming from.

The last month has clearly been challenging across much of the market, with Information Technology standing out as the primary area of strength.

That is an important reminder that even when the major stock market indexes appear relatively calm, there can be substantial differences underneath the surface.

Economic Reports to Watch This Week

Several important economic reports could influence interest rates and the stock market this week:

• Tuesday: JOLTS — Job Openings and Labor Turnover Survey
• Wednesday: Personal Income and Outlays, including the Federal Reserve’s closely watched headline and core Personal Consumption Expenditures (PCE) inflation data
• Thursday: Challenger Job Cuts
• Friday: September Jobs Report

These reports will provide investors with additional information on the labor market, consumer spending and inflation—and potentially offer clues about where Federal Reserve policy may be headed.

Keeping Everything in Perspective

Investors and markets continue to have plenty of moving parts to interpret; interest rates, oil, inflation, artificial intelligence, government borrowing and geopolitical developments.

But there are positives that should not be overlooked.

Consumers continue to spend. Unemployment remains relatively low. Corporate America continues investing heavily in artificial intelligence, and corporate profits remain strong.

The financial media will always have a reason why you should be worried.

Our job as investors is different.

Stay diversified. Stay properly allocated. Understand why you own what you own. And don’t allow short-term headlines to sway you away from a sound long-term investment strategy.

Please feel free to share The Retirement Report with family, friends and colleagues.

Thank you for reading!

Paul Levin, CFP®, ChFC®, RICP¹ , TPCP®
Managing Principal | Retirement Refined, LLC

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Important Information

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.

All market data sourced from The Wall Street Journal, Sep 25, 2026.

Securities and advisory services offered through LPL Financial, a registered investment advisor, Member FINRA/SIPC.

1. RICP conferred by The American College ↩︎