Higher Interest Rates And Oil Prices Are Not Having A Big Impact On Stocks

Market Commentary – September 28, 2026

Despite higher interest rates and persistently elevated oil prices, the S&P 500 remains within 1% of its all-time high. Small-cap stocks have not fared as well, declining 8%.

Following the FOMC’s 25-basis-point rate hike, several Federal Reserve officials reinforced their hawkish stance last week, while manufacturing and services data came in stronger than expected. Meanwhile, ongoing uncertainty surrounding the conflict with Iran has kept West Texas Intermediate (WTI) crude oil above $90 per barrel and diesel prices have reached a record high at $6.50 per gallon.

The 10-Year Treasury Yield Has Passed 5% – What’s Next?

The 10-year Treasury yield has climbed above 5%, driven by stronger-than-expected S&P Global manufacturing and services purchasing managers’ index (PMI) readings, continued elevated oil prices, a weak five-year Treasury auction, and overall fiscal concerns. Higher longterm yields put pressure on equity valuations, particularly for small-cap and rate-sensitive stocks. The 10-year yield is now approaching 5.3%, a level last seen in 2007. If yields remain below this threshold, they could retreat somewhat. However, a sustained break above 5.3% could raise market concerns that yields are headed toward 6%.