Investing in the S&P 500 means buying into what America’s biggest companies earn today, as well as what they’re expected to earn years from now. According to Goldman Sachs, about 75% of the index’s value comes from profits expected a decade or more down the line. That’s normal for stocks, though it makes them more sensitive to bond yields than you might think.
What's going on here?
The 10-year US Treasury yield is hovering around 5.1%, near its highest level in two decades. Because government bonds offer a near-risk-free return, higher yields raise the bar for every other asset. If investors can earn 5% a year from US Treasuries, they’ll want higher potential returns from stocks, and they’ll be less willing to pay top dollar for expected future profits.
That’s why rising bond yields can weigh on share prices, even when companies are operating smoothly. High-growth firms, like many in tech, feel this effect most, since their biggest cash flows are projected further down the road.
So far, strong earnings have made up for it. FactSet data show S&P 500 earnings are on track to grow about 29% year on year in the latest quarter, marking the third consecutive quarter of above 25% growth. Big companies are also fairly well-shielded from today’s higher borrowing costs, since most of their debt is locked in at longer-term fixed rates.
What's the takeaway here?
Owning future growth is what long-term investing is all about, and higher yields needn’t spell trouble for stocks. Goldman Sachs found that the S&P 500 has gained an average of 9% in the 12 months after the Federal Reserve starts raising rates. Diversification helps too: spreading your money across sectors, regions and asset classes leaves you better prepared for wherever yields and earnings go next.
(For an expert-managed portfolio that’s diversified across assets, see General Investing.)
In Other News: AI demand helps China get back on target
China’s economy grew 4.5% in the third quarter from a year earlier, a welcome turnaround after growth slipped to 4.3% in the second quarter. That puts growth for the first nine months of 2026 at 4.6%, within the government’s 4.5–5% target for the year.
Exports drove much of that growth, jumping 36% in September, and the AI boom is a big reason why. Chip exports hit a record $45 billion, up 136%, and now make up about a tenth of everything China sells abroad. Most of that jump came from higher prices rather than bigger shipments: China shipped only about 1% more chips than a year ago, but AI demand has pushed up prices for memory and other components.
Spending at home has been weaker. Even with government subsidies, retail sales grew just 1.1% in September, and property investment fell about 20% from a year earlier. Still, that 1.1% was the fastest since March and ahead of forecasts. Whether Chinese households can keep that up will decide if growth can rest on more than exports alone.
Past performance is not an indicator of future returns.
Gold in 2026: What’s moving the market
Gold has swung sharply this year, yet demand from the world’s largest buyers remains strong. In our webinar with the World Gold Council, Marissa Salim and Justin Jimenez, our Head of Macro and Investment Research, explored what’s behind those moves and where gold might fit as a long-term allocation in your portfolio.
Missed the session? Watch the full replay, and stay until the end to unlock an exclusive offer. Offer ends 1 November 2026.*
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