Stocks Edge Higher Despite Treasury Yield Headwinds

0:00Welcome to Risk Reversals Market Matrix, your AI-generated podcast curated by Guy Adamie and Dan Nathan, breaking down the day's most impactful stock market and business headlines. I'm your host Brunson, and all of today's market data is provided by FACTSAT as a reminder, be sure to subscribe to Risk Reversals Daily Markets newsletter. That's at riskreversal.substac.com. Before we get to today's news, make sure to add the latest Risk Reversal podcast here weekend playlist. It's a meeting of the minds with Jim Chanos and Gary Marcus, joining Dan, to break down the AI boom from both the technology and investment sites. Marcus questions the durability and economics of today's LLMs, while Chanos argues the data center buildout may be far less profitable than the market assumes. They also discuss parallels to the .com era, in videos unique position, financing risks, regulation, and AI security concerns. That's live right now on our YouTube channel, or wherever you listen to podcasts, it's Friday, September 25th, and these are your top stories.

1:01Stocks were higher as Wall Street closed out a volatile week, dominated by surging treasury yields. All major indices were in the green. Tech continued to lead, with meta up more than 10% this week and the sector outperforming the broader market. One source of relief today is oil. Crude prices are down about 2% on optimism that the straight of Hormuz could reopen, with WTI trading near $92 a barrel and Brent around $104. But the big story this week remains rates. The 10-year treasury yield hit its highest level since 2007, while the 30-year reached levels not seen since 2004. Hawkeye Shvedd commentary, elevated energy prices, and stronger economic data, have pushed markets toward pricing in the possibility of another rate hike in October. Despite that pressure, stocks have remained remarkably resilient. The S&P 500 gained about 1% this week, with the NASDAQ up roughly 2%, leaving both indexes just below their recent highs.

2:03And as stocks hover just below record highs, Wall Street is heading into the fourth quarter, with a pretty bullish outlook. According to our official data provider, FACT-SET, nearly 60% of all analyst ratings on S&P 500 stocks are buys. If that holds through the month end, it would be the highest level going back to at least 2010. The most bullish sectors are communication services and technology, with names like Nvidia, Microsoft, and Amazon among the most favored. Materials, energy, and healthcare are also seeing strong analyst support. The outlier is consumer staples, where just 45% of ratings are buys, and the sector has the highest percentage of both hold and sell ratings. And overall, analyst sentiment has actually gotten slightly more bullish since the end of June. Back to the bond market, the 10-year treasury yield surged above 5% to its highest level since 2007. But the bigger concern on Wall Street may be how quickly it got there. The yield was below 4.8% just two weeks ago, and has since climbed

3:04above 5.1%. One of its fastest moves in years. CNBC notes that historically moves this sharp have often been followed by some kind of stress in financial markets. So what's driving it? According to the Wall Street Journal, part of the problem is that the US economy simply isn't slowing down. Growth, hiring, and AI investment have remained strong despite higher rates, tariffs, and inflation, while elevated energy prices and a surge in corporate borrowing tied to the AI build out are adding even more pressure on yields. That creates a difficult setup for the Fed. If higher borrowing costs aren't cooling the economy as much as they normally would, and AI investment keeps adding fuel to growth, policymakers may have to raise rates even further to keep inflation under control. Meanwhile, investors are watching regional banks, private credit, and debt heavy AI data center projects for signs of stress, as one strategist put it, when yields rise this fast, something always breaks. The question now is where the pressure shows

4:05up first. Bill Gates is sounding the alarm on the risks of artificial intelligence, warning that the technology could be used by bad actors to cause catastrophic harm. In an interview with NBC, Gates pointed to threats including cyber attacks, fraud, disinformation, and attacks on critical infrastructure, and said self-regulation by the industry isn't enough. He's calling on lawmakers and law enforcement to play a bigger role in setting safeguards and monitoring requirements, as AI systems become more powerful. His comments come as more leaders across the industry raise concerns about the pace of development, with the CEOs of Anthropic and Open AI recently saying that race should slow down. In other AI news, a new startup is already drawing investment offers at a valuation of $10 billion or more, just days after launching its first product. According to the Financial Times, Typesafe AI's Jeff Model is designed to handle simple software decisions much faster and cheaper than large language models like ChatGPT and Klaude. The bigger idea,

5:06companies may not need expensive frontier models for every AI task. If that catches on, it could put pressure on the economics of Open AI and Anthropic. The Financial Times is highlighting a new wave of AI Neo-lapse, attracting huge amounts of venture capital, often before they have meaningful products or revenue. These startups have raised roughly $24 billion in just the past two quarters, with some reaching multi-billion dollar valuations almost immediately. The bet is that AI is still early enough for new challenges to break into the top tier, especially with companies shopping around for cheaper, more specialized models. And one clear beneficiary is Nvidia, which has backed more than half of this group, while also supplying the chips they need to compete. That's your risk reversal market matrix. Be sure to follow us to get alerts on new episodes every day. All of the articles mentioned on today's podcast can be found in the show description. For Guy Adami and Dan Nathan's market analysis on these topics and more, watch market call on RiskRversals YouTube channel Monday through Thursday. Special thanks to our data provider

6:09FACSET for supporting our coverage. Story Curation by RiskRversal, scripts by AI, voice by 11 laps. I'm Brunson. Thanks for listening.