Nasdaq hits record as dollar and Treasury yields climb, oil prices ease

On October 5, US stock indexes surged as heavyweight technology firms like Nvidia, Meta Platforms, and Microsoft experienced gains. The Nasdaq Composite reached a new record high, climbing 1% while the Dow Jones Industrial Average increased by 0.18%, and the S&P 500 rose approximately 0.7%. Treasury yields stayed near multiyear peaks, and the US dollar strengthened against the euro.

This favorable market performance extended to European shares, which ended the day higher despite French equities slipping to a six-month low due to fiscal concerns. The pan-European STOXX 600 index also gained 0.4% after hitting a four-month low the previous week amid surging global bond yields and inflation. Latin American markets saw an improvement as well, buoyed by a strong showing by Senator Flavio Bolsonaro in the first round of Brazil's presidential election, propelling him into a runoff against incumbent Luiz Inacio Lula da Silva.

Morgan Stanley's chief investment officer, Lisa Shalett, stated that her team is observing three key areas for potential stress: equity market and earnings revisions breadth, high-yield bond spreads, and the strength of the US dollar, along with currency market volatility.