Why US Treasury Yields and Nasdaq Are Hitting New Highs Together

Why US Treasury Yields and Nasdaq Are Hitting New Highs Together

TREE NEWS reports: The 10-year US Treasury yield climbed above 5.3% during the Chinese National Day holiday, its highest level since 2002. At the same time, the Nasdaq and leading technology shares — including Nvidia and TSMC — pushed to fresh records. The simultaneous move is unusual: rising rates normally compress equity valuations, especially for long-duration growth stocks. This time, technology shares appear largely “rate-insensitive.”

The Semiconductor Cycle, Not Rates, Is the Real Driver

Analysis from GF Securities argues that the global semiconductor cycle is still in an “accelerating upswing” or “high-speed oscillation” phase, not on the verge of a sharp slowdown. For technology stocks, interest rates mainly affect short-term valuations, while the medium-term direction is set by industry prosperity.

Historical data supports this. Over the past three decades, the correlation between the Dow Jones Industrial Average and the 10-year Treasury yield has been about -0.41, while the Philadelphia Semiconductor Index shows only -0.13. By contrast, the correlation between the Philadelphia Semiconductor Index and year-on-year growth in global semiconductor sales reaches 0.40, versus just 0.20 for the Dow. Semiconductor share prices are more tightly linked to industry momentum than to interest rates.

More importantly, the Philadelphia Semiconductor Index has historically peaked later than global semiconductor sales growth. In other words, technology rallies are not afraid of a normal pullback from high growth levels. The real bull-bear dividing line is whether the industry cycle enters a sharp slowdown.

Timing and Earnings Signals

Historically, the Philadelphia Semiconductor Index peaks about six to ten months after the high point in global semiconductor sales growth. Even if growth shifts from “accelerating” to “high-speed oscillation,” prices may not peak immediately. The global semiconductor cycle lasts an average of 42 months — 23 months up, 19 months down. The current cycle bottomed in April 2023. If the third quarter of 2025 marks the start of a new AI-driven semiconductor sales cycle, the upswing could extend to around the third quarter of 2027.

Growth signals have not yet shown clear loss of momentum. Nvidia management’s latest August earnings guidance points to 70% revenue growth for calendar 2027, and said growth could “point to doubling” if supply chain bottlenecks ease. GF Securities sees this as evidence that the semiconductor industry beta can remain elevated.

What Counts as a Real Slowdown

Markets are not entirely intolerant of decelerating technology growth. Historical experience shows that for companies whose prior-year growth exceeded 50%, market performance typically deteriorates only when the current-year growth decline exceeds 30 percentage points. For companies with prior-year growth above 80%, it often takes a decline of more than 50 percentage points to trigger a sharp valuation selloff.

A pullback from high growth is therefore not enough to signal a bull-bear switch. As long as growth remains at a high level, or merely shifts from “accelerating” to “high-speed oscillation,” technology stocks can stay strong. The trend reversal depends on whether the industry cycle moves from high-level oscillation into a sharp slowdown.

The fact that record Treasury yields have not suppressed the Nasdaq does not mean the market is ignoring rate risk. It means AI-driven industry growth is still sufficient to support technology earnings expectations. As long as the industry cycle does not clearly lose speed, rate pressure on valuations can be partly offset by earnings growth.

Fourth-Quarter Catalysts and Investor Takeaways

From October through early December, the AI supply chain enters a dense catalyst period: technology roadmap updates, earnings validation, and commercialization repricing. The OCP Global Summit on October 12-15 and Nvidia’s GTC Washington conference from November 30 to December 3 will be key windows for observing custom chips, optical interconnects, rack-level systems, and power and cooling technologies. Earnings from the four major cloud providers in late October and early November, followed by Nvidia and Dell, will further test the chain from cloud investment to hardware orders to revenue and profit. Oracle AI World and Microsoft Ignite will offer windows into enterprise agents and AI commercialization.

• Rates are secondary: For technology stocks, interest rates are a short-term valuation headwind, not the primary driver of medium-term direction.
• Watch the cycle, not the yield: The bull-bear dividing line is a sharp slowdown in the semiconductor cycle, not a normal deceleration from high growth.
• Earnings guidance matters: Nvidia’s 70% growth guidance for 2027 and potential upside to doubling keep the industry beta elevated.
• Catalyst-rich quarter: Q4 AI conferences and earnings will test demand expectations and could reinforce the technology rally.