Jim Cramer, host of CNBC's "Mad Money," warned that the recent strength in leading technology stocks, particularly those driving the artificial intelligence rally, may be masking significant stress in the U.S. Treasury market. Cramer suggested that the divergence between the performance of AI stocks and defensive sectors indicates that rising bond yields are beginning to pressure income-oriented equities.
On Monday, the Nasdaq Composite closed 1.05% higher at 27,477.31, driven by gains in Nvidia, Microsoft, and Meta Platforms. Meanwhile, the 10-year Treasury yield exceeded 5.34%, and the 30-year yield approached 5.7%. Cramer noted that the S&P 500 also gained 0.66% to close at 7,773.95.
The commentator attributed the market's unusual divergence to company-specific catalysts. Nvidia has benefited from strong customer returns on its newest chips, while Microsoft has seen improved investor sentiment around its Copilot AI assistant. Meta has attracted attention for its Muse personal-agent application and its potential to deepen relationships with small businesses.
Cramer argued that the S&P 500 and Nasdaq’s strength should not be viewed as an all-clear signal. He stated that the bond market may provide a better indicator of Wall Street’s direction until rising-rate pressures ease. He suggested that continued Treasury selling could reflect substantial government borrowing, demand for data-center financing, or hedge funds positioning against bonds.
The warning comes as the bond market has faced pressure for several weeks. On September 30, the 30-year Treasury yield reached 5.63%, its highest level since June 2002, despite cooler-than-expected inflation data. The yield also rose for seven consecutive sessions, marking its longest such streak in two years. Cramer noted that a weaker-than-expected jobs report last week briefly pushed down Treasury yields and rate-hike expectations, but the relief lasted less than a day.
"The only conclusion: the bond sellers so far have been anything but stupid," Cramer said.
