U.S. equities ended last week in positive territory, but the sharper swings came from Treasuries. The S&P 500 gained 1.2% for the week and the Nasdaq added 2%, while the 10-year U.S. Treasury yield repeatedly pushed higher and touched 5.2297% intraday on Friday, the highest level since 2007. Microsoft, lifted by the rollout of its new Copilot, rose 3.66% and became a key driver for large-cap tech.
Geopolitical headlines carried into the weekend. Donald Trump rejected an Iranian proposal tied to the Strait of Hormuz, and oil prices moved higher again in early Asian trading on Monday. The U.S. is also due to release more details later Monday on recent trade discussions with China. This week’s calendar includes JOLTS, PCE, nonfarm payrolls, Micron earnings, and OpenAI DevDay. AI and rates remain the market’s two main trading tracks.
Microsoft leads as the three major indexes close higher
On Friday, the S&P 500 rose 0.51% to 7,743.41, the Nasdaq gained 0.48% to 27,068.72, and the Dow Jones Industrial Average climbed 0.93% to 51,828.62. The VIX fell 5.11% to 14.87.
The Philadelphia Semiconductor Index added about 1.4%. Among the Magnificent Seven, five stocks rose and two fell: Microsoft gained 3.66%, Apple rose 1.53%, Alphabet Class A added 0.46%, Nvidia edged up 0.22%, and Amazon climbed 0.12%. Tesla fell 1.54% and Meta dropped 3.33%. Even with Friday’s pullback, Meta still posted a gain of about 13% for the week.
The Nasdaq Golden Dragon China Index fell 0.64% to 5,687.91.
Treasuries retreat from session highs, but long-end yields stay elevated
Bond yields pulled back from intraday extremes. The 2-year Treasury yield ended at 4.81%, while the 10-year finished around 5.16%. During the session, the 10-year reached 5.2297%, the highest since 2007, and the 30-year touched 5.5319%, the highest since 2004.
The MOVE Index rose about 30% for the week, marking its biggest weekly increase since April 2025. Stocks finished higher on Friday, but pressure in the bond market did not go away.
The Federal Reserve only began its first rate-hike move in three years in September. By Friday’s close, rate futures were pricing roughly a 66% probability of at least another 25-basis-point hike in October.
Economic data has remained firm, and AI capital spending is also driving corporate financing and equipment demand higher. That leaves a less forgiving backdrop for technology stocks. Earnings expectations may still move up, but with long-term yields sitting at multi-year highs, share prices are becoming more dependent on actual orders and delivered results.
Microsoft and Dell were still able to rise on Friday because investors had fresh product news and industry catalysts to trade on. Companies with high valuations but no clear growth signal face more pressure when long-dated Treasury yields are above 5%.
New Copilot lifts software and hardware names
Friday’s AI trade centered on Microsoft. The latest version of Copilot adds code-generation features and persistent AI agent capabilities, extending Microsoft’s push toward Agents that can handle tasks over longer periods. Microsoft rose 3.66% on the day, Qualcomm gained 4%, and Dell climbed 5%, with enterprise software, servers, and AI hardware all moving higher together.
Akamai also rose another 3.2%. The company had recently signed a $11.6 billion cloud computing contract with Anthropic that runs for seven years.
There were fresh developments across both AI applications and infrastructure. A few days earlier, Muse had shifted attention toward agents, CPUs, and storage. Copilot then brought enterprise software back to the center of the trade. Whether companies can actually put AI into everyday workflows is becoming a key test for real-world adoption.
U.S. core capital goods orders for August also came in stronger than expected, and investment in computers and electronic equipment remained resilient. AI capital expenditure is still supporting demand for corporate equipment.
Oil falls, then rebounds after weekend developments
In commodities, WTI crude fell 2.3% on Friday to $92.41 a barrel, while Brent crude declined 2.1% to $104.32 a barrel. Spot gold rose 0.31% to $4,291.25 an ounce. In early Asian trading on Monday, Bitcoin traded near $84,000 and Ether was around $2,690.
Oil had dropped more than 2% on Friday as U.S.-Iran talks showed signs of progress, but the situation changed again over the weekend. Iran proposed reopening the Strait of Hormuz within seven days and pausing regional conflict. Trump publicly rejected that proposal on Saturday. Diplomatic channels have not been fully cut off, and Trump said on Sunday that U.S. negotiators are still expected to remain in contact with Iran this week.
International oil prices rose more than 1% in early Asian trading on Monday.
Over the past few weeks, oil and Treasuries have shown a clear link. A renewed move higher in crude can add to inflation concerns, while progress in talks can quickly push energy prices lower. Any new shift in U.S.-Iran contact this week could directly affect rate trading in U.S. equities.
More China-U.S. trade details due Monday, advanced AI chips remain outside talks
After last week’s meeting between Trump and Xi Jinping, China and the U.S. agreed to extend their trade truce by two months, to Jan. 10 next year.
U.S. Trade Representative Greer said Washington will release more details on Monday from negotiations held over the past few weeks. The two sides have already reached arrangements covering some agricultural products, medical devices, and non-sensitive consumer goods.
Advanced AI chips were not included in this round of talks. Greer said some high-performance U.S. chips that require export licenses are tied to the country’s competitive position in AI, and there has been no substantive discussion on that subject.
The new details due later Monday are mainly expected to focus on critical minerals, ordinary technology products, and supply-chain rules. There has been no obvious change for now in export policy on advanced AI chips.
What markets are watching this week
Tuesday brings JOLTS and OpenAI DevDay. The U.S. August job openings report will help set the tone for labor-market trading early in the week. OpenAI will hold DevDay in San Francisco on the same day, and any updates on Agents, APIs, or developer tools could directly affect software, cloud computing, and AI hardware names.
Wednesday is the busiest day of the week. The U.S. will release August personal income and spending data, including core PCE, while ADP will publish its September private payrolls report. Micron will report fiscal 2026 fourth-quarter earnings after the close, and traders will be watching HBM, DRAM, and NAND pricing, gross margin, and next-quarter guidance for read-through to the memory segment.
Friday shifts attention to the September nonfarm payrolls report. The Fed has just re-entered a rate-hike cycle, and the 10-year Treasury yield is still above 5%. Payroll growth, the unemployment rate, and wage gains will directly shape pricing for the next rate decision.