Rates Hit a 19-Year High. The Nasdaq Set a Record the Same Week

The ten-year traded as high as 5.23% Friday and the Nasdaq Composite closed at a record Monday. Both systematic strategies finished the week with a new shape, and the two most rate-sensitive sectors were among the ones that left.

Brad Roth
September 27, 2026

TL;DR

• The S&P 500 gained 1.21% and the Nasdaq Composite 2.06%, while the equal-weight S&P 500 fell 0.56%. Semiconductors rose 7.4% in five sessions.

• The ten-year closed at 5.167%, up 17 basis points on the week. Consumers now expect 4.6% inflation over the next year, the highest reading since June.

• The index strategy now owns all three major benchmarks in near-equal thirds. The even-weight strategy runs technology, healthcare and financials at 20% each, with 40% in Treasury bills paying about 4.2%.

Week in Review

Weekly closes, Friday 9/25/26

• The S&P 500 closed at 7,743.41, up 1.21% on the week.

• The Dow ended at 51,828.62, up 0.28%.

• The Nasdaq Composite finished at 27,068.72, up 2.06%.

• The Russell 2000 closed at 2,837.55, down 0.80%.

• The VIX ended at 14.87 against 14.81 a week ago.

The index rose and the average stock didn't. The equal-weight S&P 500 fell 0.56% while the cap-weighted version gained 1.27%, a gap of almost two points in five sessions. Semiconductors did the lifting, up 7.4%, as the AI trade spread past Nvidia to AMD, Intel and Arm. Counting Monday's sector dividends, technology led all eleven at 3.63%, then communication services at 2.27% and healthcare at 1.75%. Utilities finished last, down 3.14%, with energy down 2.94%, financials 1.47% and real estate 1.45%.

This time the long end moved. The two-year note closed at 4.864% against 4.743%, the ten-year at 5.167% against 4.996%, and the thirty-year at 5.502% against 5.327%. That's 12 basis points at the front and 17 at both the ten and the thirty. The gap between the two-year and the ten-year widened to 30 basis points from 25.

Three things pushed it. The flash business surveys came in hot, Fed Governor Michael Barr said more increases are needed, and a soft Treasury auction landed on top of both. Futures moved to price roughly a 70% chance of another quarter-point in October. Michigan's final September survey Friday showed sentiment at 48.1, a four-month low, with year-ahead inflation expectations up to 4.6% from 4.0%.

Crude traded the headlines. American and Iranian officials met at the UN General Assembly, Houthi missiles hit Saudi Arabia again, and West Texas traded above $96 Thursday before settling Friday at $92.44. Gold closed at $4,320.50, down about 2% on the week, and silver fell 3%. Bitcoin ended near $84,970.

Allocation Changes

Both published strategies changed shape this week.

The index strategy added the Nasdaq 100 and now splits almost evenly across all three major benchmarks: the Nasdaq 100 at 33.8%, the S&P 500 at 33.2% and the Dow at 33.2%. A week ago it held the S&P 500 and the Dow at roughly half each. The Nasdaq 100 then outran both, up 3.19% for the week.

The even-weight sector strategy moved from six sectors to three. Technology came in at 20.2%. Healthcare and financials stayed and now sit at 20.2% and 20.1%. Utilities, real estate, materials and industrials left, and 40.2% now sits in Treasury bills. Two of the four that left finished among the four weakest sectors of the week. The sector that came in led all eleven. When fewer sectors earn a place, the balance goes to bills, and a three-month bill pays 4.175% while the rest of the market sorts itself out.

The actively managed strategy's changes were drift. The rate hedge grew to 4.9% from 4.6% as long yields climbed, and the direct energy position eased to 12.9% from 13.6% as crude came off.

The Bigger Picture

A ten-year at 5.17% changes which businesses can fund themselves cheaply, and the sector lineup now reflects that. Utilities and real estate borrow long to build long-lived assets. When the thirty-year adds 17 basis points in a week, both get repriced as bond substitutes, and both did. Utilities fell 3.14%. Real estate fell 1.45% with the 30-year mortgage rate back over 7%. Neither is in the portfolio now.

Technology earned its way in on the opposite math. Its growth isn't priced off the ten-year the way a utility's dividend is. This week's leadership also had breadth inside the sector: semiconductors rose 7.4% on AMD, Intel and Arm, not on one name. The even-weight construction owns that as one sector at 20%, so no single chipmaker can grow into a fifth of the portfolio.

Financials is the honest one. It fell 1.47% this week and sits below its 50-day average. It stays because one soft week doesn't break a trend. There's also a macro argument on its side: the curve steepened five basis points, and a steeper curve is what a bank earns on. Healthcare is the steady one, up 1.75% for the week and again one of the three best sectors, with revenue that doesn't answer to the policy rate or a barrel of oil.

This is late-cycle behavior. The Fed is raising into an energy shock, consumers expect more inflation, and the index is making highs on a handful of chip and platform names. A market that narrow can run for a while. When it stops, the damage usually shows up first in the stocks that were never part of the rally.

THOR Risk Gauge

Cautiously Bullish. The S&P 500 gained 1.21%, the VIX closed under 15, and the index strategy is fully invested across all three benchmarks. The ten-year at a 19-year high, a likely October hike and 4.6% consumer inflation expectations argue against leaning harder. The sector strategy's 40% in bills reflects that mix: full exposure where the trend is clean, cash where it isn't.

Signal Watch

THOR Index Rotation — As of 9/25/26

All three benchmarks, nearly equal thirds, fully invested. The Nasdaq 100 beat the Dow by almost three points this week. Owning both in the same size means the portfolio doesn't have to guess which one leads next week.

THOR Low Volatility — As of 9/25/26

Three sectors, three different drivers: a growth cycle, a demand curve that ignores rates, and a yield curve that just got steeper. The most rate-sensitive sectors are out, and the cash earns about 4.2% while it waits.

THOR AdaptiveRisk Dynamic — As of 9/25/26

The actively managed strategy runs 59.0% in equities, 15.4% in commodities, 14.6% in specialty currency exposure, 5.9% in alternatives and 4.9% in rate hedging. The long dollar position is still the largest single line. The rate hedge is the one built for a week like this, a ten-year pushing toward 5.2%, and it grew as yields rose.

Weekend Reading

Behind the Ticker — Kevin T. Carter of EMX ETFs. Carter built the first China tech ETF in 2010 and the emerging markets internet ETF in 2014, and launched the China AI Tigers ETF with EMX in August. He uses Jensen Huang's five-layer AI stack to show where the fund sits: the fourth layer, China's large language models.

10-year Treasury yield hits highest level since 2007 as market prices in another Fed rate hike (Yahoo Finance, September 23). Ines Ferré on the day the ten-year crossed 5.1%. Hot business surveys, Barr's comments and oil pushed October hike odds to about 70%, and the piece notes AI infrastructure borrowing is now competing with the Treasury for the same buyers.

US Treasury yields hit highest level since 2007 (Semafor, September 24). Ellen DiMauro on the fiscal side of the move: bigger deficits, a weak five-year auction and mortgage rates back over 7%. It's the piece to read if you want the argument for why long yields may not come back quickly.

Oil nears $108 on fading US-Iran breakthrough and new strikes on Saudi Arabia (The National, September 24). Alvin R Cabral on the day diplomacy at the UN stalled and crude jumped about 5%. The reopened East-West pipeline around Hormuz is the one supply offset worth watching.

Quote of the Week

"Rule number one: most things will prove to be cyclical. Rule number two: some of the greatest opportunities for gain and loss come when other people forget rule number one."

— Howard Marks, Oaktree Capital, The Most Important Thing

Brad Roth / CIO, THOR Financial Technologies

This content reflects the opinions, analyses, and research of THOR Financial Technologies as of the date published. It is provided for informational and educational purposes only and does not constitute investment advice and should not be relied upon as the basis for any investment decision. Past performance doesn't guarantee future results, and all investments involve risk. For more information, please go to: thorft.com