Jim Cramer says AI giants lifted indexes as Treasury yields climbed

Jim Cramer’s Treasury-yields analysis centered on a split beneath Monday’s strong index performance: a few giant technology stocks lifted the Nasdaq and S&P 500 while higher rates still pressured other parts of the market. For investors who own index funds, the session showed how a small group of large holdings can make a broad benchmark look stronger than the market conditions facing many individual stocks.

CNBC reported that the Nasdaq Composite rose about 1% to a record close. The S&P 500 gained 0.66% and ended 0.3% below its Aug. 13 record close. At the same time, the 10-year Treasury yield moved above 5.34% and the 30-year yield approached 5.7%, both multiyear highs, according to CNBC.

Cramer, the CNBC host, said the apparent disconnect reflected the unusually large influence of Nvidia, Microsoft and Meta. The three companies’ gains helped drive market-capitalization-weighted indexes, which give bigger companies more influence over an index’s daily movement.

Why did stocks rise while Treasury yields climbed?

Meta rose 1.9%, Microsoft added 1.5% and Nvidia gained 2.1%, marking Nvidia’s first record close since May, CNBC reported. As of the preceding Friday’s close, Nvidia accounted for about 8.5% of the S&P 500, Microsoft represented roughly 5.8% and Meta about 2.4%. Together, that was nearly 17% of the index.

That concentration means advances in those companies can lift the S&P 500 and Nasdaq even while rising yields weigh on much of the rest of the market, according to Cramer. He pointed to weakness in traditional safety stocks and many utilities as signs that rate pressure had not disappeared. CNBC said bonds offered income-seeking investors relatively more attractive payouts than they had months earlier.

Cramer cited several company-specific reasons for investor enthusiasm, but these were his views rather than independently established causes of the day’s moves. He said Nvidia’s newer chips were producing strong returns for customers, sentiment around Microsoft’s Copilot AI assistant had improved, and Meta’s Muse personal-agent app had attracted enthusiasm, including for its potential small-business ties.

What was Cramer’s warning for investors?

Cramer said he did not view record or near-record index levels as an all-clear signal. In his assessment, the ongoing Treasury sell-off remained the more useful market signal until pressure from yields eased. When investors sell Treasurys, their prices fall and their yields rise.

He offered possible explanations for the Treasury selling, including the government’s borrowing needs, strong demand for money to fund data-center projects and hedge funds shorting bonds. CNBC did not present those as confirmed causes. Cramer also said a weaker-than-expected jobs report the prior week had reduced yields for less than a day.

CNBC disclosed that Cramer’s Charitable Trust, the portfolio run by CNBC’s Investing Club, owns shares of Meta, Microsoft and Nvidia.

This story draws on original reporting from CNBC.