Article by: Tide Research
Last week, U.S. equities closed higher, but the week’s true volatility came from the bond market. The S&P 500 rose 1.2%, the Nasdaq gained 2%, while the 10-year U.S. Treasury yield surged repeatedly, reaching a intraday high of 5.2297% on Friday—the highest level since 2007. Microsoft rose 3.66% on the release of its new Copilot, serving as a major driver for tech stocks. Over the weekend, Trump rejected Iran’s proposal regarding the Strait of Hormuz, prompting oil prices to rebound early Monday in Asian trading; U.S. officials will release further details on U.S.-China trade talks today. This week brings a series of key events: JOLTS, PCE, non-farm payrolls, Micron’s earnings report, and OpenAI DevDay. AI and interest rates remain the two dominant themes driving market sentiment.
Microsoft rose 3.66% to lead the market, as all three major indices closed higher.
The S&P 500 rose 0.51% to 7,743.41, the Nasdaq gained 0.48% to 27,068.72, and the Dow Jones increased 0.93% to 51,828.62 on Friday. The VIX fell 5.11% to 14.87.
The Philadelphia Semiconductor Index rose approximately 1.4%. Five of the Magnificent Seven gained, while two declined: Microsoft rose 3.66%, Apple rose 1.53%, Alphabet A rose 0.46%, NVIDIA rose 0.22%, and Amazon rose 0.12%; Tesla fell 1.54%, and Meta fell 3.33%. Despite Friday’s pullback, Meta still rose approximately 13% for the week.
The Nasdaq Golden China Index fell 0.64% to 5,687.91.
The bond market pulled back from intraday highs. The 2-year U.S. Treasury yield closed at 4.81%, and the 10-year yield closed at approximately 5.16%. The 10-year yield rose intraday to 5.2297%, the highest level since 2007; the 30-year yield reached a peak of 5.5319%, the highest level since 2004.
WTI crude oil fell 2.3% to $92.41 per barrel, while Brent crude oil dropped 2.1% to $104.32 per barrel. Spot gold rose 0.31% to $4,291.25 per ounce. In early Asian trading on Monday, Bitcoin was around $84,000, and Ethereum was approximately $2,690.
The new Copilot drives software and hardware growth, sending Microsoft shares up 3.66%.
On Friday, Microsoft was the star of AI trading.
The new version of Copilot introduces capabilities such as code generation and persistent AI agents, continuing its evolution toward agents capable of long-term task execution. On the same day, Microsoft rose 3.66%, Qualcomm increased 4%, and Dell gained 5%, with enterprise software, servers, and AI hardware all strengthening in tandem.
Akamai also rose another 3.2%. The company recently signed a seven-year, $11.6 billion cloud computing contract with Anthropic.
New advancements are emerging in both AI applications and infrastructure. A few days ago, Muse shifted focus to agents, CPUs, and storage, while Copilot brought enterprise software back to the trading floor. Whether businesses can truly integrate AI into their daily workflows is becoming the key test for AI adoption.
U.S. core capital goods orders for August also came in stronger than expected, with investment in computers and electronic equipment remaining resilient. AI capital expenditures continue to support demand for business equipment.
The 10-year U.S. Treasury yield touched 5.2297% during trading, and the MOVE Index rose 30% for the week.
Stock markets rose on Friday, but pressure in the bond market has not disappeared.
The 10-year U.S. Treasury yield rose intraday to 5.2297% before retreating to around 5.16%; the 30-year yield briefly touched 5.5319%. The MOVE Index rose approximately 30% for the week, marking its largest weekly increase since April 2025.
The Federal Reserve just initiated its first interest rate hike in three years in September. At Friday's close, interest rate futures priced in a roughly 66% probability of another rate hike of at least 25 basis points in October.
Economic data remains robust, and AI-related capital expenditures are further boosting corporate financing and equipment investment demand. For tech stocks, the current environment is not accommodative. While earnings expectations still have room to rise, long-term interest rates remain at multi-year highs, making stock prices increasingly dependent on actual orders and realized performance.
On Friday, companies like Microsoft and Dell were able to rise due to new products and industry catalysts. Companies with high valuations but no clear growth catalysts will face greater pressure from long-term bond yields above 5%.
Iran deal rejected by Trump; oil prices rebound in early Asian trading on Monday
On Friday, crude oil fell over 2% amid progress in U.S.-Iran negotiations; the situation changed again over the weekend.
Iran proposed reopening the Strait of Hormuz within seven days and suspending regional conflicts; Trump publicly rejected the proposal on Saturday. Diplomatic channels between the two sides have not been fully severed, and Trump said on Sunday that U.S. negotiators are expected to continue engaging with Iran this week.
During early Asian trading on Monday, international oil prices rose more than 1%.
Over the past few weeks, oil prices and U.S. Treasuries have shown a clear correlation. A rebound in crude oil prices increases inflation concerns, while progress in negotiations can quickly depress energy prices. Whether there are any new developments in U.S.-Iran contacts this week will continue to directly impact rate trading in U.S. equities.
Details of U.S.-China trade talks were released today; high-end AI chips were not on the negotiating table.
After their meeting last week, the United States and China agreed to extend the trade truce by two months until January 10 of next year.
U.S. Trade Representative Greer said the U.S. will release more details on the progress made during negotiations over the past few weeks on Monday. Both sides have already reached agreements on certain agricultural products, medical devices, and non-sensitive consumer goods.
High-end AI chips were not included in these negotiations. Greer stated that certain high-performance U.S. chips requiring export licenses are critical to America’s competitive advantage in AI, and no substantive discussions have taken place on this issue yet.
Today’s new details primarily focus on critical minerals, general technology products, and supply chain rules. Export policies for high-end AI chips have not shown significant changes.
This Week's Focus
Watch JOLTS and OpenAI DevDay on Tuesday. The U.S. August job openings data will set the tone for this week’s labor market. OpenAI’s DevDay in San Francisco on the same day will reveal whether there are new updates to Agents, APIs, and development tools—directly impacting trading in software, cloud computing, and AI hardware.
Wednesday is the busiest day of the week. The U.S. will release August personal income and spending data, including core PCE; ADP will also publish its September private employment report. Micron will report its fiscal year 2026 fourth-quarter results, and HBM, DRAM, and NAND prices, gross margins, and guidance for the next quarter will impact the storage sector.
Watch the September non-farm payrolls on Friday. The Fed has just re-entered its tightening cycle, and the 10-year U.S. Treasury yield remains above 5%. New job creation, the unemployment rate, and wage growth will directly influence pricing for the next interest rate decision.