S&P’s $18 Trillion Rally Threatened by Psychology of 5% Yields
- Stocks face risk of correction amid surge in Treasury yields
- Market pros warn of ‘knee-jerk’ selling if 10-year breaches 5%
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For years it’s seemed like nothing could stop the stock market’s inexorable march higher, as the S&P 500 Index soared more than 50% from the start of 2023 to the end of 2024, adding $18 trillion in value in the process. Now, however, Wall Street is seeing what can ultimately derail this rally: Treasury yields above 5%.
Equities traders have shrugged off the bond market’s warnings for months, focusing instead on the windfall from President-elect Donald Trump’s promised tax cuts and the seemingly limitless possibilities of artificial intelligence. But the risk came into focus last week as Treasury yields climbed toward their ominous milestones and share prices sank in response.