5% Yields vs Nasdaq: Which One Blinks First?

The bond market is sending a pretty clear message.

The US 10-year Treasury yield pushed above 5%, reaching around 5.23% on Friday — its highest level since 2007. Yet the Nasdaq-100 still finished the week roughly 3% higher and remained close to record highs. 

That creates an interesting market tension.

Higher Treasury yields increase the return investors can get from relatively low-risk assets and raise the discount rate used to value future corporate earnings. In theory, that creates more pressure on high-growth stocks.

But the Nasdaq is holding up.

Why?

Earnings expectations are doing some of the heavy lifting.

If companies can continue delivering strong revenue and profit growth, investors may be willing to tolerate a higher discount rate. But if earnings momentum starts slowing, a 5%+ Treasury yield could become much harder for elevated equity valuations to ignore.

So I don’t think the real question is simply:

“Will 5% yields break the Nasdaq?”

The more interesting question is:

Can earnings growth keep outrunning the valuation pressure from higher rates?

That could be one of the biggest tests for tech stocks heading into the next earnings cycle.