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Bond Yields Breach 5%, Oil Tops $100, but Investors Stay Bullish on Stocks

Bond yields and oil spiked, but investors stayed bullish on stocks, with a BofA survey showing optimism on earnings and continued AI spending.

AI News Feed · 2026-09-16 15:53

The S&P 500 has added more than 10.8% so far this year. The tech-heavy Nasdaq Composite has jumped 11.8% year-to-date, and the Dow Jones Industrial Average is up 8.4%. Stocks listed in South Korea, Japan and Europe have also rallied. Stocks faced more volatility this week after leading AI voices warned the technology was moving too fast to be safe and safeguards were needed.

Bank of America's latest Global Fund Manager Survey, released Tuesday, found that many market participants appear undeterred from pouring cash into the stock market. The survey polled 170 investors overseeing a collective $470 billion in assets. It found that while the 'excess bullishness' seen over the summer had faded, investors remained broadly optimistic about growth and earnings, with most expecting continued heavy spending on AI.

A net 49% of money managers remained overweight global equities in September, a slight pullback from the previous month, but stocks remained the most common overweight position of any asset class. Expectations for double-digit earnings-per-share growth over the next 12 months were at their highest since August 2021. Thirty-eight percent of respondents said they expected a global economic 'boom' in the coming year. Allocation to bonds was at its lowest level since May 2022.

In a note on Tuesday, strategists at the BlackRock Investment Institute said rising bond yields had not knocked them off their pro-risk stance, though they are raising the hurdle for returns. They said higher rates and strong equities need not be contradictory because what drives yields matters. When higher yields reflect stronger investment and growth, the resulting earnings strength can help offset a higher cost of capital. That explains why they maintain U.S. equity and AI overweights. The strategists said AI-related investment can support growth and profits even as the same investment boom absorbs capital, power and other scarce resources.

Toni Meadows, head of investment at BRI Wealth Management, told CNBC in an email on Tuesday that the 'gold rush' mentality around AI meant there would be periods when investors question which future they are investing for. He said the pace of investment in AI data centres and related infrastructure is insatiable at present, but there will be bottlenecks and the circular nature of some revenue streams within the sector opens 'the AI trade' up to some fragility. Meadows said he doubted the current questions being raised would derail the story, even if there is now a period of reflection and readjustment. He added that there are likely to be a series of pauses in the AI trade, and whether they develop into a deeper sell-off depends on how worried investors become about the returns to investment, the funding of spending and the circular nature of revenues in some areas.

Tej Sthankiya, senior investment analyst for impact investing at Federated Hermes, told CNBC that the recent AI sell-off created buying opportunities for longer-term investors. He said it is difficult to predict how long the volatility will go on because the market's short-term risk appetite is heavily influenced by top-down macro factors such as rates, oil and geopolitics, where trends have been less benign in recent days and weeks. Sthankiya said the AI data center buildout has been capacity constrained by access to critical semiconductor wafers and power, and there are no signs of these bottlenecks abating in the near term.

Mark Haefele, chief investment officer at UBS Global Wealth Management, said in a Tuesday morning note that the key question for investors is not whether frontier development slows, but whether AI demand and monetization will continue to expand. He said UBS believes the answer is still yes. UBS continues to favor a diversified approach across the AI value chain, combining infrastructure beneficiaries including semiconductors, networking, power and cloud with larger platforms and software companies positioned to monetize adoption. Haefele added that stronger AI safeguards may reshape competition, but the proposals so far do not establish that the AI capex cycle is ending.