U.S. stock index futures rose Monday morning as benchmark Treasury yields pulled back from recent peaks, encouraging investors to return to technology shares after days of heightened market volatility, according to reports from Fortune and CNBC.
The stabilization in financial markets arrived on the 39th anniversary of the 1987 Black Monday market crash, when the Dow Jones Industrial Average plunged 22.6 percent in a single day, Fortune noted. On Monday, trading appeared significantly more orderly as the yield on the benchmark 10-year U.S. Treasury note dropped to 5.08 percent, easing back from a recent high of 5.3 percent.
Treasury Yields Ease After Last Week’s Spike
The retreat in government bond yields provided a measure of relief after a punishing stretch for Wall Street. Michael Hartnett’s research team at Bank of America noted that market pricing during last week’s yield spike had reflected risk levels comparable to the Great Financial Crisis, Fortune reported.
Rapidly rising yields have generated widespread concerns across financial markets, particularly regarding the steep borrowing costs facing mega-cap technology firms as they spend aggressively to build artificial intelligence infrastructure.
Rising Capital Costs for Artificial Intelligence
Savita Subramanian, an equity strategist at Bank of America, highlighted that the weighted average cost of capital for hyperscale cloud providers has jumped to 10 percent, up from four percent in 2023, according to Fortune. That benchmark effectively establishes a 10 percent return-on-investment hurdle that companies must clear to justify continuous capital outlays.
“Economics 101 tells us that investing makes sense until returns on incremental invested capital (ROIIC) fall below the weighted average cost of capital (WACC). Inflation, real yields, credit events, increased regulations, equity supply outpacing demand are risks from here,” Subramanian wrote in an analysis cited by Fortune.
Subramanian noted that artificial intelligence dominates roughly 90 percent of discussions during institutional client meetings. While she projected that the current wave of capital expenditures still has room to expand, she warned of a potential “marked shift in trend” next year if long-term yields fail to decline.
Semiconductor Sentiment Stabilizes
Signs of renewed confidence also emerged within the semiconductor sector, where shares of Intel advanced four percent during premarket trading on Monday following a rating upgrade from JPMorgan, CNBC reported.
JPMorgan analyst Harlan Sur upgraded Intel to neutral from underweight while keeping his price target at $85, which represents a five percent discount from Friday’s closing level. Sur pointed out in a note to clients on Sunday that Intel shares had fallen 36 percent since reaching a peak in late June, bringing the company’s valuation to a more balanced risk-and-reward standing.
Sur attributed the operational turnaround to Chief Executive Lip-Bu Tan, writing that Intel has demonstrated improved execution and greater competitiveness in datacenter compute and core client markets, alongside notable strides in next-generation manufacturing, CNBC reported.
Although investors continue to debate the broader sustainability of massive AI infrastructure budgets, Sur stated that expanding agentic AI workloads, which require substantial central processing power, combined with tight supply conditions for advanced silicon, should support positive earnings-per-share revisions for Intel through calendar year 2027.
What Comes Next for the Market
Whether Monday’s rebound marks a lasting shift or a temporary pause in market turbulence remains to be seen. Wall Street will closely scrutinize upcoming corporate earnings reports and Treasury auctions to determine whether tech earnings can keep pace with borrowing costs, and whether bond yields will stay in check as economic pressures unfold.
