US Markets Have Shown Resilience Despite Bond Yields

Investors navigate AI growth as stock market values added $2.5 trillion in September despite rising Treasury yields.

Updated on Oct. 10, 2026 in Investing

Isometric editorial illustration of a large stack of industrial steel cargo containers, representing the scale of capital investment in US infrastructure. — US equity markets added $2.5 trillion in value in September 2026, as robust corporate earnings and AI infrastructure spending offset rising Treasury yields. AI Illustration. Upload story photo >

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Is now a good time for you to aggressively invest in artificial intelligence companies?

US equity markets gained $2.5 trillion in value during September 2026 despite the 10-year Treasury yield climbing from 4.75% to 5.29%. Professor Aswath Damodaran has outlined strategic approaches for investors to navigate artificial intelligence developments while managing market risk.

Why it matters

Market resilience is largely attributed to robust corporate earnings growth, with AI infrastructure spending serving as the primary driver for a surge in capital expenditures. Investors are currently weighing these gains against broader market pressures as nearly two-thirds of stocks experienced declines during the third quarter.

US companies reached $904 billion in net income during Q2 2026, marking a 57% year-on-year increase. Meanwhile, the expected return on stocks climbed to 8.99% as the implied equity risk premium fell to 3.70%.

The players

Aswath Damodaran

A finance professor and expert in valuation who holds positions in major technology firms including Amazon, Alphabet, Meta Platforms, and Microsoft.

The details

Companies are returning 63% of earnings to shareholders, supported by capital expenditures that reached $133.4 billion in the second quarter. Tech-driven capital expenditure growth exceeded 50%, while analysts have raised earnings forecasts for 2027 and 2028.

Q2 2026 saw net income reach $904 billion.
Nearly 65% of listed stocks declined during Q3 2026.
US markets recorded $2.5 trillion in growth during September 2026.
Earnings forecasts have been raised for 2027.
Earnings forecasts have been raised for 2028.

Market Dynamics

The current investment environment follows a pattern set by the S&P 500 market consensus. Investors are choosing between active AI-focused strategies or aligning with broader index fund performance.

Retail investors should consider whether to back individual AI developers or utilize index funds to track the broader S&P 500 performance. Rising yields may adjust portfolio allocation strategies as expectations for stock returns have climbed to 8.99%.

The takeaway

Investors should balance the potential of AI-driven growth against the reality that most individual stocks saw declines last quarter. Focusing on companies with strong earnings growth and sustainable capital expenditure remains a key strategy for managing current market volatility.