Market Weekly September 21-25, 2026 | US long-term interest rates hit 5% for the first time in about 19 years. Why stocks aren't collapsing yet, and the signs to watch for when …

In this article, I summarize the weekly movements of the Japanese and US markets from the perspective of a former strategy consultant and individual investor. This edition covers the movements from last week, Monday, September 21 to Friday, September 25. Japan had a three-day weekend from 9/21 to 9/23, so there were only two trading days on 9/24 and 9/25.

Table of Contents

In 3 lines

• While US long-term interest rates (10-year Treasury yield) rose to the 5% range for the first time in about 19 years, the S&P 500 was up 1.21% for the week, and the Nasdaq Composite was up 2.06%. Semiconductor stocks drove the gains.

• In Japan, the Nikkei 225 rose 2.07% and the TOPIX rose 0.92% in the two trading days after the holiday. Semiconductor stocks and bank stocks, which reacted to expectations of additional interest rate hikes by the Bank of Japan, were among the top performers.

• The reason stocks haven’t collapsed despite rising interest rates is that corporate earnings forecasts continue to rise. If interest rates rise while economic indicators remain weak, stocks are prone to falling, as they were in March of this year. The US employment report on 10/2 this week will be the turning point.

Last week’s figures

US (9/18 closing price → 9/25 closing price)

• S&P 500 7,650.50 → 7,743.41 (+1.21%), Nasdaq Composite 26,522.55 → 27,068.72 (+2.06%) (FRED S&P 500 / FRED Nasdaq Composite)

• US Treasury yields: 2-year 4.76% → 4.81% (+5bp), 10-year 5.01% → 5.17% (+16bp), 30-year 5.34% → 5.49% (+15bp) (US Treasury). The 10-year note hit 5.18% on 9/24, a level not seen since 2007.

• Crude oil (WTI) was $92.41 per barrel on 9/25 (Minkabu FX), down 3.6% for the week in the crude oil ETF USO. Gold was down 1.9% in the gold ETF GLD.

Japan (9/18 closing price → 9/25 closing price)

• Nikkei 225 65,018.95 yen → 66,364.20 yen (+2.07%), TOPIX 4,091.14 → 4,128.59 (+0.92%) (9/25 data from Zaikei Shimbun)

• New 10-year JGB yield: 9/24 3.070% → 9/25 3.049%

• Dollar-Yen (Tokyo 15:00) 9/18 157.18 yen → 9/25 158.25 yen, a 0.7% depreciation of the yen. The yen strengthened to 156.94 yen during NY hours on 9/25, but this was after the TSE close, so it will be reflected in Japanese stocks starting Monday, 9/28.

US ── The tug-of-war between interest rates and semiconductors

Last week’s US stock market was a tug-of-war between rising interest rates and buying in semiconductor stocks. This was the week following the interest rate hikes by both the US and Japanese central banks the previous week. The Fed raised the policy rate by 0.25% to 3.75-4.00% on 9/16 (CNBC), and the Bank of Japan raised it to 1.25% on 9/18 (Nikkei).

• 9/21 (Mon) S&P 500 +1.49%. The 10-year Treasury yield fell 5bp to 4.96%. Lower oil prices and gains in semiconductor stocks pushed the index up, with AMD +9.95% and Intel +12.17% (TheStreet)

• 9/23 (Wed) S&P 500 -0.75%. The September S&P Global PMI flash reading was the strongest in about five years, and due to expectations of continued rate hikes, the 10-year Treasury yield rose +15bp to 5.11% (TheStreet).

• 9/24 (Thu) S&P 500 -0.02%. The 10-year Treasury yield was +7bp at 5.18%. Oracle sent a force majeure notice to the developer (Stack Infrastructure, a subsidiary of Blue Owl Capital) of its New Mexico data center project, “Project Jupiter.” It was reported that this would allow for payment deferrals if the 2028 operational target is not met, following delays in the completion of the gas pipeline supplying power until February 2027. Oracle states that “the project is proceeding as planned.” The stock price fell as much as -7.7% intraday (low of $133.48) compared to the previous day, and closed at $139.54, down -3.47% (TheStreet / TechCrunch / SiliconANGLE).

• 9/25 (Fri) S&P 500 +0.51%. The 10-year Treasury yield was -1bp at 5.17%. Crude oil prices fell due to expectations of progress in US-Iran talks, halting the rise in interest rates. Akamai gained +8.78% after securing an $11.6 billion cloud usage contract with Anthropic over seven years (TheStreet).

The stock market’s weekly gain was largely driven by the +1.49% rise on Monday (9/21). On 9/23-24, when the 10-year Treasury yield rose 0.22% (22bp) in two days, the S&P 500 fell -0.78%. Stocks fell on days when interest rates rose and rose on days when they fell.

By sector, Information Technology led with +3.52%, and the semiconductor ETF SMH was +5.86%. The laggards were Utilities -3.87%, Energy -3.53%, Real Estate -2.28%, and Financials -1.83% (all closing prices for SPDR sector ETFs). Seven out of 11 sectors declined, and the index’s rise was skewed toward high-tech, centered on semiconductors.

Japan ── The two days after the long weekend

• 9/24 (Thu) The Nikkei Stock Average rose +495 yen to 65,513 yen, but the TOPIX fell, with the two indices moving in opposite directions. The service sector was the worst performer among the 33 sectors, down -4.61% (Zaikei Shimbun).

• 9/25 (Fri) The Nikkei Stock Average rose +850 yen to 66,364 yen for a fifth consecutive day of gains, and the TOPIX also rose +1.31% (Zaikei Shimbun). The banking sector led the 33 sectors with a +4.08% gain (Zaikei Shimbun).

For the week, 19 out of 33 sectors rose. The top performers were Electric Appliances +3.50%, Precision Instruments +3.20%, Rubber Products +2.64%, Banks +2.34%, and Machinery +2.31%. The laggards were Services -3.22%, Electric & Gas -3.20%, and Mining -1.73% (Kabutan). The Nikkei’s +2.07% gain outperformed the TOPIX’s +0.92% because semiconductor stocks with large weightings in the Nikkei, such as Tokyo Electron (+6.42%) and Advantest (+6.08%), rose.

Reasons why US long-term interest rates haven’t caused a stock market collapse despite being in the 5% range

In short, it is because corporate profit growth is outpacing the rise in interest rates. However, when interest rates rise while the economy is weakening, stocks tend to fall, as was the case in March of this year.

What is happening now

• The Fed resumed rate hikes on 9/16, setting the policy rate at 3.75-4.00% (CNBC). The US 10-year Treasury yield hit 5.18% on 9/24, a level not seen since 2007, and rose 0.52% (52bp) in one month (20 business days). This is the fastest rise this year (US Department of the Treasury).

• What is rising is the real interest rate (the interest rate minus inflation), which accounted for 0.41% of the 0.43% rise in September. Rather than anxiety over rising prices, the view that the Fed’s tightening will continue is pushing rates up (FRED Real Interest Rate・FRED Expected Inflation Rate)

1. Even with interest rates up 1%, stock prices have risen 13% since the beginning of the year

• Since the beginning of the year, the 10-year Treasury yield rose 0.99% from 4.18% to 5.17%, but the S&P 500 rose 13.1% from 6,846 to 7,743 (FRED 10-Year Treasury・FRED S&P 500)

• In daily price movements, stocks tend to fall on days when interest rates rise. Over the 184 trading days this year, the correlation between changes in the 10-year Treasury yield and the S&P 500’s performance was -0.44 (a moderate inverse correlation). Even so, over the course of the year, stocks are up.

• What supported this was the earnings outlook. The S&P 500 earnings growth rate for 2026 projected by analysts rose from 17.1% as of March 27 to 32.0% as of September 25 (FactSet 3/27・FactSet 9/25)

• Due to the rise in interest rates, the forward P/E ratio, which indicates whether stocks are expensive or cheap, fell from 20.4x on June 30 to 19.2x on September 25. However, during the same period, 12-month forward earnings per share (EPS) increased by 8.9%, and stock prices rose by 2.7% (FactSet 9/25, above).

2. Even with the same interest rate hike, stocks fell 7% in March. The difference is the economy

• March: From February 27 to March 27, the 10-year Treasury yield rose 0.47%, and the S&P 500 fell 7.4%. The Strait of Hormuz was effectively blockaded following the US and Israeli attacks on Iran at the end of February, and WTI crude oil rose to the $100 range for the first time since 2022. During the same period, US non-farm payrolls for February fell by 92,000, and the GDP growth rate for the October-December quarter was revised downward to 0.7% (Janus Henderson)

• September: From August 26 to September 24, the 10-year Treasury yield rose 0.52%, but the S&P 500 was up 0.4%. The September S&P Global PMI flash reading (business sentiment) was at its strongest in about five years (TheStreet), and earnings forecasts for the July-September quarter were revised upward by 1.3% from June 30. Since the average over the past five years is a 2.2% decline during the quarter, an upward revision is unusual (FactSet 9/25, above).

• The content of the rising interest rates was the same, and both were real interest rates (0.41% in March and 0.51% in September). What divided the stock market’s reaction was the direction of the economy and earnings.

• The decline in March was quickly reversed. Following the announcement of a ceasefire in the Middle East and strong January-March earnings, the S&P 500 rose 10.5% in April (Janus Henderson)

3. Since 2022, stocks have tended to fall in months when interest rates rise sharply

• From 2006 to 2021, there were 9 months where the 10-year Treasury yield rose by 0.3% or more in a single month, and the S&P 500 rose in 7 of those months, with an average gain of 1.1%.

• Since 2022, there have been 6 months with the same conditions, and it fell in 4 of them, with an average decline of 2.4% (S&P 500 is from Professor Robert Shiller’s data, and the 10-year Treasury is from FRED. Both are calculated as monthly averages).

• The correlation between monthly movements of interest rates and stocks has been +0.22 over the past 20 years, +0.10 over 15 years, and +0.03 over 10 years; looking at the long term, there is no relationship where “when interest rates rise, stocks fall.” It has only been negative over the past 5 years (-0.32).

Until 2021, when prices were stable, interest rates rose due to the strength of the economy, and stocks rose along with them. Since 2022, interest rate hikes to curb inflation have been driving interest rates, and the rise in interest rates has become a direct weight on stocks. State Street Global Advisors also stated as of June that the relationship where stocks fall when interest rates rise is continuing (SSGA).

4. Expert views

• Cautious: Morgan Stanley’s Mike Wilson stated that if financial conditions tighten further or energy prices rise significantly, the S&P 500 could fall to 7,100 (down 8.3% from the 9/25 close). He maintains his forecast of a rise to 8,000 by year-end (Yahoo Finance)

• Cautious: LPL Research calculated that in periods over the past 20 years when the 10-year Treasury yield rose significantly (average 0.58%) in 20 trading days, the S&P 500 fell by an average of 1.6% over the subsequent 20 trading days (LPL Research)

• Resilient: J.P. Morgan Private Bank stated that the S&P 500’s net profit margin is at a record high of 17%, and profit growth is offsetting the impact of rising interest rates (J.P. Morgan)

• Resilient: J.P. Morgan’s equity strategy team stated that corporate net interest-bearing debt is 20-40% lower than the historical average relative to equity, and the average duration of debt is long at 5-6 years, so stocks can withstand rising interest rates (Investing.com)

5. Outlook going forward

• Case where stocks remain resilient: Interest rate hikes stop, and upward revisions to profit forecasts continue in the July-September earnings season starting in mid-October.

• Case where stocks fall: Real interest rates rise further after the 9/30 PCE (US inflation indicator) or the 10/2 employment report, while employment is weak. This would follow the same pattern as March.

• Conditions for changing the outlook: 10-year real interest rates approach 3% (2.85% on 9/24), or downward revisions to profit forecasts increase in earnings reports.

Looking at your assets

• US stock indices (S&P 500, etc.): This year’s rise has been supported by profit growth. Even in weeks when interest rates rise, the point to watch is whether upward revisions to profit forecasts continue.

• Japanese stocks: Last week, semiconductor and bank stocks pushed the index higher. As both Japanese and US interest rates rise, the highlight is whether these two sectors will continue to rise.

• Dollar-denominated assets/Foreign currency deposits: The dollar-yen rate remained weak at 158.25 yen at 15:00 Tokyo time, but the yen strengthened to 156.94 yen during the 9/25 NY session. This yen appreciation will be reflected for the first time in the Tokyo market on Monday, 9/28.

Monitoring themes ── AI, Finance, Real Estate

Semiconductors rose for the week in both Japan and the US. In the US, AMD +12.66%, Micron +6.54%, TSMC +3.67%, and NVIDIA +1.26% all rose, while Broadcom was -1.34%. In Japan, all three stocks rose: Tokyo Electron +6.42%, Advantest +6.08%, and Kioxia +2.22%. The US semiconductor index SOX was +6.27%.

The reason semiconductors were bought even in a week of rising interest rates is thought to be the continued orders related to AI. On the other hand, Oracle’s force majeure clause notification highlighted the risk that data center operations may not proceed as planned due to power procurement and permitting delays. Even within the AI sector, a divide is beginning to emerge between those receiving orders and those funding data centers. The focus is on the Micron earnings report on 9/30 (US time).

In the US, four banks fell: JPMorgan down 1.88%, Bank of America down 1.78%, Wells Fargo down 3.65%, and Goldman Sachs down 0.70%, while Citigroup was up 1.90%. In Japan, Mitsubishi UFJ rose 2.60%, Sumitomo Mitsui FG rose 1.30%, and Mizuho FG rose 1.54%, with all three banks gaining.

In the US, the 10-year Treasury yield rose 0.22% over two days, and US banks rose on 9/25 when the interest rate hike stopped. In Japan, speculation about the Bank of Japan’s “additional rate hike within the year” was evaluated as an improvement in interest margins. The focus is on the BOJ Tankan survey on 10/1.

• Real Estate

The US real estate sector (XLRE) was down 2.28% for the week. In Japan, the TSE REIT Index remained almost flat, moving from 1,730.69 to 1,731.48 (+0.05%), while Mitsui Fudosan rose 1.52% and Mitsubishi Estate rose 1.16%.

In the US, the rise in long-term interest rates became a drag on real estate. In Japan, the REIT index has not fallen even with the 10-year Treasury yield in the 3% range, and acquisitions of REITs trading below NAV are considered one of the supporting factors. On 9/25, a former Murakami Fund-affiliated group announced a TOB for Sankei Real Estate Investment Corporation (M&A News September 26, 2026). The overall picture of last week’s M&A is summarized in M&A News Weekly September 21-25, 2026.

Key events for this week

• 9/30 (Wed) 21:30 US PCE Deflator (August) (BEA Official Schedule): If price growth exceeds expectations and real interest rates rise, it will be a drag on stocks. Micron earnings after the US market close on the same day (Micron IR)

• 10/1 (Thu) 8:50 BOJ Tankan (September survey): If corporate price forecasts rise, speculation about an additional rate hike within the year will strengthen, supporting bank stocks

• 10/2 (Fri) 21:30 US September Employment Statistics (BLS): If interest rates rise while employment is weak, be careful of a March-style decline. If interest rates rise while employment is strong, stocks are likely to hold up, as they did in September

Additionally, 9/29 (Tue) is the ex-rights date for Japanese stocks, and Kioxia will begin trading at the price after its 1:3 stock split. On the same day at 23:00, US JOLTS job openings (BLS), and on 10/1 (Thu) at 23:00, the US ISM Manufacturing Index (ISM).

How was it? In this note, I post analysis articles on the Japanese and US markets every weekday, and a weekly summary on Sundays. If there are any themes or stocks you are interested in, please let me know in the comments. Likes and follows are also encouraging.

This article is for informational purposes only and is not investment advice. Please make investment decisions at your own risk.