QQQ outperforms SPY and DIA as bond yields hit multi-decade highs

The Invesco QQQ Trust, which tracks the Nasdaq-100, is posting the lowest decline among major U.S. benchmark indexes this week as rising bond yields pressure global equity markets. While all three U.S. benchmark indexes are poised to end the week lower, the tech-heavy Nasdaq is slated for the least decline compared to its peers.

This relative resilience is attributed to the strength of major technology stocks and the AI-related sector. Major chip stocks, including Nvidia Corp., Micron Technology, and Intel Corp., are on track to end the week in green. In contrast, the SPDR S&P 500 ETF Trust and the SPDR Dow Jones Industrial Average ETF are headed to red territory as inflationary concerns and rising yields weigh on broader equities.

The sell-off in bonds has been broad, with yields reaching multi-year and multi-decade highs before pulling back on Thursday. At the time of writing, the 10-year U.S. Treasury yield was trading at 5.256%, slightly below its previous high of 5.34%. This level represents the highest for the 10-year yield since 2002. The 30-year Treasury bond yield stood at 5.633%, marking a 24-year high.

Asian markets are also trending lower due to soaring energy prices, inflationary concerns, and interest rate uncertainty. The iShares MSCI Taiwan ETF posted the worst decline among Asian stocks, sliding nearly 2% lower this week. The iShares MSCI China ETF was down nearly 1% in a shortened week that extends through Oct. 8 for the Mid-Autumn Golden Week holidays.

In Japan, the 10-year JGB yield rose to around 3.08%, hovering close to a three-decade high. Japanese equity markets face pressure from a stronger case for further Bank of Japan tightening. Meanwhile, mainland Chinese markets fell sharply earlier in the week as technology stocks retreated and investors questioned whether policy support would be sufficient to revive growth and property demand.

Taiwan and South Korea have faced pressure from the global rate shock and oil-driven inflation, sliding despite some AI-related strength earlier in the week. The iShares MSCI Japan ETF and iShares MSCI South Korea ETF are also on track to end the week lower.

Julie Kozack, the IMF's communications director, told reporters on Thursday that global bond markets remain operating in an orderly fashion. On Stocktwits, retail sentiment for SPY, QQQ, and DIA showed green signals. EWT sentiment was bullish, while MCHI and EWJ were neutral. EWY sentiment was bearish at the time of writing.