- The Nasdaq Composite closed at a record 27,477.31 on Oct. 5, while the S&P 500 climbed to 7,773.95, leaving the benchmark just 0.3% below its August record close.
The US stock market is extending its record-setting run, with large technology companies once again doing much of the heavy lifting. The Nasdaq Composite gained 1.1% on Monday to reach its 23rd record close of 2026, while the S&P 500 rose 0.7% and the Dow Jones Industrial Average added 0.2%. The Russell 2000 gained 0.5%, showing that the advance was not limited entirely to mega-cap companies.
The latest stock market rally comes despite a difficult backdrop for equities. The 10-year US Treasury yield finished around 5.31%, close to its highest level in more than two decades, while investors are still assessing inflation, government borrowing and the Federal Reserve's next policy move.
Nvidia, Microsoft and Other Megacaps Lead the Rally
Nvidia Corp. (NASDAQ: NVDA) remains the clearest driver of the artificial-intelligence trade. Its shares gained 2.1% Monday and reached another record close, lifting Nvidia's market value to approximately $5.76 trillion.
The move extends the strength highlighted in the Nvidia stock rally earlier this month, when the chipmaker returned to record territory as investors renewed their confidence in AI infrastructure spending.
Microsoft Corp. (NASDAQ: MSFT) added 1.5% Monday, while Meta Platforms Inc. (NASDAQ: META) and Tesla Inc. (NASDAQ: TSLA) each gained about 2%. Reuters reported that those companies were among the megacap technology stocks supporting the Nasdaq's latest record.
The strength is part of a broader concentration in the largest technology companies. The seven members of the so-called Magnificent Seven—Nvidia, Apple, Alphabet, Microsoft, Amazon, Meta and Tesla—reached a combined market capitalization of $24.836 trillion on Monday, according to the Wall Street Journal.
Microsoft has been a particularly important contributor to the latest technology-stock advance. Its shares rose about 39% during the third quarter, adding roughly $1 trillion to its market value as investors returned to the AI and cloud-computing trade. The company's AI-driven stock rally has therefore become an important part of the broader market story.
The gains are not confined to the biggest software and semiconductor companies. PTC Inc. (NASDAQ: PTC) surged about 33% after Schneider Electric agreed to acquire the industrial-software company for $22.6 billion in cash. RXO Inc. (NYSE: RXO) also jumped after C.H. Robinson Worldwide Inc. (NASDAQ: CHRW) agreed to acquire the freight broker in a transaction valued at about $5.8 billion.
Those transactions provided additional support for the broader market, although the central theme remains technology and AI.
Record Highs Face a Test From Treasury Yields and Earnings
One of the more unusual features of the current rally is that stocks are advancing while long-term Treasury yields remain elevated. The 10-year yield reached roughly 5.31% Monday. Higher yields normally create pressure for growth stocks because they increase the discount rate applied to future earnings and make bonds more competitive with equities.
Yet investors have continued buying technology companies whose earnings are expected to benefit from AI spending. That tension was visible earlier in October when the Treasury yield surge pushed the Dow lower while technology stocks remained comparatively resilient.
The market also received a boost from changing expectations for Federal Reserve policy. A weaker-than-expected US jobs report reduced the perceived probability of an October rate increase, according to Reuters. Traders had sharply reduced the odds of an October hike after the employment data, helping support risk assets.
Lower oil prices provided another tailwind. Crude prices declined as Middle East exports increased and Group of Seven countries pledged to increase supplies, reducing some immediate concerns about an energy-driven inflation rebound.
Still, the rally faces an important test as third-quarter earnings accelerate. Goldman Sachs expects the median S&P 500 company to report roughly 9% year-over-year earnings growth, while technology companies are expected to post substantially stronger gains. Barron's reported that analysts expect technology earnings growth of about 65% in the quarter.
That makes upcoming results particularly important for the technology stocks driving the AI rebound. Investors will need to see whether revenue growth, margins, and forward guidance can justify the valuations supporting the current rally.
Market breadth remains another issue. Barron's reported that more than 70% of S&P 500 companies were still more than 10% below their highs, while the equal-weighted S&P 500 had declined over the previous three months even as the market-cap-weighted index gained.
That divergence means the record-setting headline indexes do not necessarily reflect uniform strength across US equities.
For now, Nvidia, Microsoft and other megacap technology stocks remain firmly in control of the market's direction. The next major question is whether earnings can broaden the rally beyond a relatively small group of market leaders while Treasury yields remain elevated.