The rally, fueled by tech earnings and AI bets, has faced headwinds from soaring Treasury yields.
The Dow Jones Industrial Average climbed 18.8% in the same period, a stark contrast to the 33.8% surge seen under Trump’s first term, while the Nasdaq Composite added 35.1% versus 43.5% in the first term. The broader Russell 3000, however, outperformed, registering gains that surpassed its first‑term trajectory.
Corporate earnings have been a key driver, with S&P 500 companies reporting a 31.1% year‑on‑year rise in earnings growth. Tech‑sector earnings, in particular, leapt 72% YoY, reflecting the sector’s heavy investment in AI infrastructure.
Treasury yields have crossed the 5% threshold, making bonds a more attractive option for risk‑averse investors and pushing borrowing costs higher for corporates. Despite this, the index remains less than 3% below its August record, a testament to the resilience of AI‑backed profit growth.
Looking ahead, the rally’s sustainability hinges on continued earnings momentum and the pace of AI spending, while Treasury yields and inflation risks loom large. Analysts anticipate that corporate guidance will remain positive, but any uptick in yields could temper market enthusiasm.