Stocks are doing something that normally should not happen at the same time.
Major indexes keep closing at record highs even as Treasury yields climb to levels not seen in over two decades. That combination has traditionally meant trouble for expensive growth stocks, not fresh records.
Jim Cramer says there is a clear explanation for the disconnect. It comes down to just three companies carrying far more weight than their size alone would suggest.
Also read: Jim Cramer noticed something odd about the stock market
Cramer says a few stocks are masking the real picture
“Mad Money” host Jim Cramer said Nvidia, Microsoft and Meta are propping up the broader market even as surging Treasury yields pressure nearly everything else on Wall Street. “Here, I think there’s tremendous distortion caused by some very big winners, namely Nvidia, Microsoft and Meta,” he said.
The numbers back up his point. The Nasdaq Composite closed at a fresh record on October 5. Nvidia climbed roughly 2.1 percent to secure its first record close since May. Meta rose about 1.9 percent. Microsoft added 1.5 percent, according to CNBC.
Cramer’s Charitable Trust, the portfolio run by CNBC’s Investing Club, owns shares of all three companies.
Nvidia’s advance pushed its market value to roughly $5.7 trillion, cementing its position as the most valuable public company in the world. Some measures of market breadth remained weak beneath the headline gains, according to Reuters. The S&P 500 also advanced, though it remained just below its own all-time high reached earlier in the year.
Cramer’s broader argument is that this concentration makes the bond market an unusually important signal. If rising yields eventually catch up to even Nvidia, Microsoft and Meta, the record highs could prove far less durable. So much of the recent gains rest on so few names.
The Treasury yield surge behind the unusual pattern
The yield move underpinning Cramer’s warning has been dramatic. The 10-year Treasury yield climbed to roughly 5.32 percent on October 5. The 30-year yield pushed to around 5.67 percent, according to TheStreet.
That climb has been building for weeks. Just days earlier, the 10-year yield touched its highest level since 2002. The 30-year reached its highest point since July 2002, pushing long-term Treasury yields to levels unseen since before the 2008 financial crisis.
Analysts say the move is not simply about Federal Reserve policy anymore. Elevated real yields, heavy government borrowing and growing competition for capital are combining with a higher term premium. That dynamic goes beyond what a single rate decision could explain.
