US stocks rally as AI gains outweigh higher Treasury yields
In short
US stocks are still rising even though Treasury yields have jumped, according to an Economic Times Markets summary. Aswath Damodaran said AI-led earnings growth is helping offset the pressure from higher interest rates, and equity risk premiums have fallen below 4%.
The rally may keep going only if AI investments produce the profits investors expect. If they do not, the market could fall sharply.
What the reporting says
US stocks have rallied despite a sharp rise in Treasury yields, according to an Economic Times Markets summary citing valuation expert Aswath Damodaran. The report says AI-led earnings growth is offsetting pressure from higher interest rates, while falling equity risk premiums below 4% leave the rally dependent on whether AI investments deliver expected profits. The immediate risk is a sharper market correction if those expectations are not met.
Why it matters
An Economic Times Markets summary said US stocks have held up even as Treasury yields climbed, because AI-led earnings growth is supporting shares. It cited Aswath Damodaran, who warned that equity risk premiums below 4% leave the rally vulnerable if AI spending does not translate into profits. The story matters for US equity investors and broader market sentiment, but the exact stock move was not stated.