US stocks opened higher on Thursday as strength in software shares helped offset pressure from a sharp rise in Treasury yields. The mixed market backdrop reflects a growing divide between resilient corporate earnings and economic activity on one side, and higher long-term borrowing costs and inflation concerns on the other.

Wall Street Starts the Fourth Quarter Higher

At 9:30 a.m. ET, the Dow Jones Industrial Average rose 91.75 points, or 0.18%, to 50,997.80. The S&P 500 gained 19.39 points, or 0.25%, to 7,670.93, while the Nasdaq Composite increased 120.49 points, or 0.46%, to 26,984.50.

The opening gains came after a difficult period for fixed-income markets. The S&P 500 and Nasdaq had nevertheless recorded their second consecutive quarterly gains through September, demonstrating that equity investors have continued to tolerate higher interest rates while focusing on corporate earnings and structural growth themes, particularly artificial intelligence.

Software stocks provided early support, helping the technology-heavy Nasdaq outperform the broader market. The sector’s resilience reflects continued expectations for technology-related earnings growth even as the cost of capital rises.

Treasury Yields Create a Stronger Headwind

The main counterweight to the equity rally is the bond market. The 10-year US Treasury yield climbed to 5.34% on Thursday, its highest level since 2002, as investors continued to reassess inflation, government borrowing requirements and the longer-term path of interest rates.

The increase is particularly significant because the 10-year Treasury yield serves as a benchmark for global borrowing costs and asset valuations. Higher yields can make government bonds relatively more competitive with equities while simultaneously increasing financing expenses for companies and households.

The latest bond-market pressure has also extended beyond the United States. French, British and Japanese government bond yields have risen sharply, indicating that the repricing of long-term borrowing costs is becoming a broader global market phenomenon.

AI Spending Supports Stocks but Increases Capital Demand

Artificial intelligence remains an important source of support for US equities. Investment in data centers, semiconductors and related infrastructure is generating demand across parts of the technology sector and contributing to expectations for continued economic growth.

At the same time, the scale of AI infrastructure investment is increasing competition for capital. Large data-center projects require substantial financing, while governments are also issuing significant amounts of debt. This combination can place upward pressure on long-term yields even when short-term expectations for monetary policy become less restrictive.

Investors Enter a More Demanding Fourth Quarter

For investors in Israel and global markets, the opening gains underline the increasingly important relationship between equity earnings and the cost of capital. Stocks can remain resilient while economic growth and corporate profits are strong, but persistently elevated yields could eventually affect valuations, credit availability and business investment.

The next focus will be on US labor-market data, inflation trends, Federal Reserve communications and third-quarter corporate earnings. Whether equities can maintain their resilience will depend increasingly on whether earnings growth continues to justify elevated valuations while bond yields remain at historically high levels.