October 6, 2026

Nasdaq Hits Record High Despite Long-Term Interest Rates at 2002 Levels! Behind the Scenes of Falling Oil Prices and Tech Stock Gains

On October 5, 2026, the U.S. stock market saw a strong performance with all three major indices rising, despite a heavy interest rate environment where the 30-year Treasury yield reached 5.661%, its highest level since 2002. In particular, the Nasdaq Composite Index hit 27,477.31, setting an all-time high. The S&P 500 is also within 0.32% of its own record high.

What was the driving force that pushed the market higher, defying the conventional wisdom that “rising interest rates equal falling stock prices”? This article clearly explains the market trends, macroeconomic indicators, and the movements of sectors and individual stocks on October 5.

📌 Market Highlights in 1 Minute!

Stock prices rise despite soaring long-term interest rates: While the 30-year Treasury yield rose to 5.661%, the highest since 2002, falling oil prices and buying in large-cap tech stocks strongly drove the market.
ISM Price Index accelerates to 74.0: Although the overall ISM Services PMI slowed to 54.9, the price index recorded its highest level since July 2022, highlighting the persistence of service inflation.
Mixed results for AI and semiconductor stocks: NVIDIA hit a record high, nearing a $6 trillion market cap, while Intel fell sharply following reports of its participation in TSMC’s initiative.

📊 Major Indicator Movements

A list of closing prices for major stock indices, interest rates, and commodities.

Stock Indices & Volatility Index

Indicator Closing Price Daily Change Percentage Market Status S&P 500

7,774.11 +51.39 +0.67% 0.32% away from record high (7,798.99)
Nasdaq Composite
27,477.31 +286.45 +1.05% New all-time high Dow Jones Industrial Average
51,268.37 +91.41 +0.18% Slightly lagging performance
Russell 2000
2,853.27 — +0.72% Small-cap stocks outperformed S&P 500
VIX (Volatility Index)
15.52 +0.21 +1.37% Slight rise amid stock market gains

Interest Rates, Currencies, and Commodities

Asset Class Closing Price/Level Daily Change Key Points 2-Year Treasury Yield 4.812% -1.3bp Short-term rates fell, easing rate hike concerns 10-Year Treasury Yield 5.308% +2.8bp Trading just below the 5.34% threshold 30-Year Treasury Yield 5.661% +3.1bp New high since 2002 WTI Crude Oil Futures 89.30–90.7 USD -0.5% to -2.0% Fell due to Middle East supply recovery and G7 reserve release USD/JPY 157.96 JPY +0.02% Trading mostly sideways

🔍 Why did stocks rise despite high long-term interest rates?

Market participants have assessed that “tech strength outshines bond weakness.” The main factors supporting the stock market gains are the following three points:

Point 1: Falling oil prices ease inflation concerns
WTI crude oil fell as Middle Eastern oil exports recovered to over 16.5 million barrels per day in September, returning to pre-war levels, and following the G7’s decision to release 100 million barrels from reserves. The decline in energy costs immediately eased inflation concerns.

Point 2: Decline in 2-year Treasury yields and retreat of rate hike expectations
The 2-year Treasury yield, which reflects the outlook for policy rates, fell to 4.812% (-1.3bp). The probability of an additional rate hike at the October FOMC meeting dropped significantly from about 70% early last week to about 20%, providing relief to the stock market as short-term, direct risks of delayed rate cuts subsided.

Point 3: Overwhelming buying pressure on AI mega-cap stocks
Capital inflows into large-cap AI and semiconductor stocks, led by NVIDIA, continued. Growth expectations far outweighed the disadvantages of rising interest rates, pushing the entire market higher.

💡 Notable Macroeconomic and Geopolitical News

1. ISM Services Index: Price Index surges to 74.0

The ISM Services PMI for September slowed slightly to 54.9 (August: 55.4), but the sub-index for prices surged to 74.0 (August: 72.6), recording its highest level since July 2022. The result, where “business activity (56.5) has calmed down, but costs (74.0) are jumping,” indicates caution that the source of inflation is shifting from “commodity prices like crude oil” to “service costs and price pass-throughs.”

2. French Government Bond Sell-off and the Ripple Effect of Rising Interest Rates from Europe

Due to political instability and concerns over the 2027 budget (targeting a deficit of 5% of GDP and 54 billion euros in spending cuts), the French 10-year bond yield rose to its highest level since July 2002. The German-French 10-year bond spread widened by 32bp over the week to reach 141bp, marking the largest widening since 1990. This “European-originated bond sell-off” spilled over into U.S. Treasuries, becoming a primary factor in pushing up 30-year bond yields.

3. Middle East and Geopolitical Trends

The Yemeni government forces launched Operation “Dawn of Yemen” and recaptured positions near the Bab el-Mandeb Strait. Additionally, effective supply recovery is progressing, with the proportion of Middle Eastern oil export routes that do not pass through the Strait of Hormuz increasing from 17% before the war to 40%.

📈 Notable Individual Stock and Sector Trends

🔹 Winning Stocks (Winners)

NVIDIA: Continues to hit record highs day after day. Approaching the $6 trillion market cap milestone, it has become the driving force for the entire market.
TSMC (+2%): Hit a record high after Elon Musk confirmed discussions regarding participation in the Terafab initiative.
PTC (+33%): Surged following the announcement of a $22.6 billion acquisition by Schneider Electric.
Bio-related (Vaxcyte / Moderna +6.95%): Vaxcyte surged after releasing positive data from its Phase 3 trial for a pneumococcal vaccine. Moderna was also bought ahead of the release of data for its melanoma treatment.
Storage-related (WDC +7% / Seagate +5%): Rebounded significantly after Bernstein pointed out that the market’s sell-off in response to news of Toshiba’s production increase was an overreaction.

🔻 Struggling Stocks (Losers)

Intel (-3.3% to -4%): Sold off due to the view that TSMC’s participation in the Terafab initiative would be a blow to its foundry business restructuring.
Nike (-2.88%): Continued to fall as investors reacted negatively to an S&P Global credit rating downgrade (A+ to A).
Dining and Consumer Goods (Chipotle -4% / McDonald’s): The persistence of high long-term interest rates is acting as a pressure factor on consumer sentiment and the general consumer goods sector.

🗓 This Week’s Schedule

While this week is a period with relatively few major economic indicator releases, the following events are looming as potential sources of market volatility.

Wednesday, October 7: Release of FOMC Minutes (from the September meeting)
Full-scale Earnings Announcements: Earnings from companies such as Constellation Brands on October 6, Levi Strauss on October 7, and PepsiCo on October 8 will follow one after another, and next week marks the start of the earnings season for major financial institutions.

💡 Investment Strategy Insights

In an environment where long-term interest rates remain above 5.6%, stock selection is expected to accelerate further between “AI and large-cap tech stocks,” which possess the strong growth and cash flow to withstand rising rates, and “consumer discretionary and highly leveraged companies,” which are hit directly by high interest rates.

Regarding whether the nature of inflation is shifting toward service costs, we need to closely monitor the September CPI (Consumer Price Index) data scheduled for mid-October.

Disclaimer: This article is for informational purposes only and does not recommend the buying or selling of any specific securities. Please make investment decisions at your own risk.