Fervent Wealth Management

Stock Market Insights

ByJoe Shearrer, CPFA®

A Strange Combination and a Resilient Stock Market

One of the more surprising stories in financial markets this year has been the resilience of stocks despite a significant rise in interest rates. The yield on the 10-year U.S. Treasury recently crossed 5%, reaching its highest level since 2007. At the same time, the S&P 500 remains up double digits for the year and, despite some recent weakness, is still less than 3% below its August record high.

Normally, those two things don't necessarily go together. That phrase made me think about a recent trip to Taco Bell with my kids. Since we were eating inside, they got to make their own drinks from the self-serve soda machines. As usual, they decided one soda wasn't enough. They mixed two different flavors together to create their own combination. I looked at them and thought, I'm pretty sure those two things aren't supposed to go together. However, for some reason they seemed to like it.

Financial markets can sometimes give us that same thought. You can have two things that don't traditionally seem to belong together sitting side by side. Higher Treasury yields create competition for stocks. When investors can earn around 5% on a 10-year Treasury, they may become less willing to pay high valuations for equities. Higher rates can also increase borrowing costs for businesses and consumers.

We are already seeing some of that pressure show up in stock valuations. The S&P 500's forward price-to-earnings ratio has fallen to around 19 times expected earnings. So why haven't stocks fallen more? The answer, at least so far, has been earnings.

Think of stock prices as being influenced by two sides of a scale: what investors are willing to pay for each dollar of earnings and how much those companies actually earn. Higher interest rates can push the first side of the scale lower by making stocks less attractive at elevated valuations. However, when corporate earnings are growing, that growth can help counterbalance the pressure. That appears to be an important part of the story playing out in the market today.

Corporate earnings have continued to grow, helping offset the decline in valuations. AI investment has played an important role, with enormous amounts of capital being invested in data centers, semiconductors and other infrastructure needed to support the continued expansion of AI. That creates an important distinction for investors. A 5% Treasury yield by itself doesn't necessarily mean stocks have to fall. The bigger concern would be a rapid, disorderly increase in rates or a situation where higher borrowing costs begin materially hurting corporate profits.

There are certainly reasons for caution. Higher interest rates, elevated oil prices, geopolitical uncertainty and still-elevated stock valuations create plenty of opportunities for volatility. A normal 5% to 10% market pullback shouldn't surprise anyone after the gains we've experienced. That said, volatility and a deteriorating investment environment aren't necessarily the same thing.

Rather than focusing on one particular interest-rate level, investors may be better served watching the relationship between rates and corporate earnings. If earnings continue growing, the market may be able to absorb higher rates better than many expect. If profits begin weakening while rates remain elevated, however, that would be a much more meaningful warning sign.

And just like my kids' self-created soda combinations, sometimes two things that don't seem like they should go together can work just fine. The important question is whether the combination continues to work.

Have a blessed week!

Joe Shearrer

www.FerventWM.com

Securities and advisory services offered through LPL Financial, a registered investment advisor, Member FINRA/SIPC.

Opinions voiced above are for general information only & not intended as specific advice or recommendations for any person. All performance cited is historical & is no guarantee of future results. All indices are unmanaged and may not be invested directly. Market conditions and Fed expectations can change quickly. This article reflects information available on the morning of September 16, 2026, before any Federal Reserve announcement.

All investing involves risk, including loss of principal. No strategy assures success or protects against loss. Any economic forecast outlined in this material may not develop as predicted & there can be no guarantee that strategies promoted will be successful. Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services.

Fervent Wealth Management is a financial management and services entity in Springfield, Missouri.

Sources: https://www.reuters.com/business/finance/stocks-wobble-no-sign-panic-yields-surge-2026-09-15/

Stocks Open Sharply Higher on Falling Oil Prices, Post-Fed Day Clarity

At the Open: U.S. futures were primed for a post-rate decision bounce as markets appeared to appreciate the newfound clarity provided by the Federal Reserve’s (Fed) first rate hike since 2023. Wednesday’s 0.25% rate increase gave investors some relief that central bankers remain dedicated to fighting sticky inflation, while reports that Saudi Arabia is seeking to partially restore flows through the east-west pipeline within days cooled crude oil prices and inflation angst. Also bolstering equities was a drop in Treasury yields across the curve, led by intermediate rates, which pushed the 10-year yield back near 4.95%. The dollar eased from yesterday’s spike, and gold jumped over 2%.



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Stocks Open Higher Ahead of Highly Anticipated FOMC Meeting


At the Open: U.S. equities are attempting to stabilize this morning after two consecutive sessions of broad-based selling pressure. A modest pullback in oil prices overnight, coupled with some stabilization in Treasury yields, is helping improve risk sentiment and supporting a rebound in equity markets. The primary focus today will be the Federal Reserve's (Fed) monetary policy announcement, where market participants widely expect a 25-basis-point rate hike. Beyond the policy decision, investors will be closely scrutinizing the updated Summary of Economic Projections, including the path for growth, inflation, unemployment, and interest rates. Particular attention will also be paid to comments from Fed Chair Kevin Warsh for clues on how policymakers view the balance between inflation risks and economic growth, as well as the likely trajectory for rates into year-end. Markets are currently pricing in a strong probability of another rate increase by December. Retail sales, trade data, and housing sentiment are also on the economic calendar for today.



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Stocks Withstand Rates and Oil Pressures to Open Little Changed

At the Open: The major averages are sitting near the flatline in early trading this morning, digesting a 5% 10-year Treasury yield and $100-plus on West Texas Intermediate (WTI) relatively well, on top of concerns about the potential dangers of artificial intelligence (AI). The Saudi East-West pipeline remains closed, with a near-term diplomatic offramp yet to come into view. In corporate news, Bank of America’s (BAC) warning that trading revenue would be flat this quarter weighed on money center banks. This morning’s economic data includes the Empire State Manufacturing Survey, which was soft (7.6 vs. 15.0 expected), and ADP weekly employment, which accelerated to 16.25K from 12.25K the prior week. In addition, the Treasury is selling $13 billion in 20-year notes ahead of Wednesday’s Fed decision. Fed funds futures are pricing in a 90% probability of a quarter-point hike.



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Stocks Open Lower as AI Executives Hit the Brakes on Development


At the Open: U.S. equities started the week on the defensive as rising oil prices weighed on sentiment. Supply concerns intensified after a meeting between several Gulf nations, including Iran, to discuss a temporary shipping corridor through the Strait of Hormuz was postponed. Adding to the uncertainty, Saudi Aramco shut down its East-West pipeline following drone attacks, disrupting a critical export route that bypasses the Persian Gulf. Treasury yields moved higher alongside oil prices, with the 10-year Treasury yield inching closer to the 5% threshold as investors reassessed inflation risks. The AI trade also came under pressure after Anthropic CEO Dario Amodei called for companies to slow the pace of AI development. His comments received support from both Elon Musk and OpenAI CEO Sam Altman, who separately announced that his company will not go public this year. The developments raised questions about the pace of AI investment, future spending trends across the sector, and whether U.S. firms can maintain their leadership position in the increasingly competitive global AI race.



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Mortgage rates aren’t really that high, history shows
By Dr. Richard Baker

We are spoiled. Our family was driving through Slovakia and had to pack food for breakfast and lunch because there were no restaurants on the road for several hours. Here in America, we have become so accustomed to having multiple food options at any given time that it was strange for us to preplan for food for a day. Americans have become a little spoiled with our mortgage rates too.

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Mortgage rates aren’t really that high, history shows We are spoiled. Our family was driving through Slovakia and had to pack food for breakfast and lunch because there were no restaurants on the road for several hours. Here in America, we have become so accustomed to having multiple food options at any given time that it was strange for us to preplan

Stocks Open Higher on Break in Oil as CPI Slightly Misses Expectations

At the Open: Lower oil prices and an in-line consumer inflation report helped stocks regain their footing this morning after four straight losing sessions for the S&P 500. Oil fell on reports of planned coordinated efforts between the IRGC and Gulf states to open the Strait of Hormuz and demand warnings from the IEA. Stocks mostly held early gains following this morning’s key Consumer Price Index (CPI) report which narrowly missed expectations for monthly core prices (+0.3% vs. +0.2%), but the year-over-year core measure rounded to 2.4%, as expected. Still, the report was met with a repricing of rate hike probabilities for next week to near 90%. Oracle (ORCL) shares are about 6% higher on its earnings report that included a doubling of cloud revenue, while Adobe (ADBE) shares are down 3% after its quarterly results failed to impress. The 10-year Treasury yield is holding steady near 4.94% post-CPI. WTI crude is down 3% at just over $99.



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Stock Market Insights

By Dr. Richard Baker, AIF®

Mortgage rates aren’t really that high, history shows

We are spoiled. Our family was driving through Slovakia and had to pack food for breakfast and lunch because there were no restaurants on the road for several hours. Here in America, we have become so accustomed to having multiple food options at any given time that it was strange for us to preplan for food for a day. Americans have become a little spoiled with our mortgage rates too.
I keep hearing about borrowers getting frustrated waiting for mortgage rates to drop. They currently average 6.7%, according to the Freddie Mac Primary Mortgage Market Survey. This frustration is bad news for a housing market in its fourth year of decline. I hear young people saying, “Mortgage rates are higher than they have ever been.”
Well, they aren’t.

Mortgage rate history

Here is a history lesson on what the rates were – according to the Federal Housing Finance Agency’s National Mortgage Database – for those of us who survived childhood without the internet.
• 1975: 9.5%
• 1980: 12.9%
• 1985: 13.1%
• 1990: 9.9%
• 1995: 9.2%
• 2000: 8.3%
• 2005: 5.6%
• 2010: 4.9%
• 2015: 3.6%
• 2020: 3.7%
• 2025: 6.9%
• Current: 6.71%

Best strategy

I know this sounds a lot like walking to school uphill both ways, but rates have been a lot higher than they are right now. The worst that I remember is November 1981, when mortgage rates were 18.4%. Rates aren’t historically that high; the problem is that many of us took advantage of those lower, more recent rates and locked in fixed mortgages that are hard to give up.

Most Americans feel handcuffed to stay in their current homes because they don’t think they can give up their low mortgage rates. According to the FHFA, 70% of mortgaged U.S. homeowners have a rate below 5%, about half have a rate below 4%, and 20% have a rate below 3% – and they are not moving unless they have to.
Many buyers won’t consider making a move until rates drop to 6% or below. I understand their reasoning. Buying a $400,000 home at the current 30-year interest rate costs roughly $600 more per month than it did in 2020, assuming a 20% deposit.

The reason we have fewer houses for sale isn't that rates are in the high 6% range, but that rates were previously too low, and Americans don't want to give up those savings. Housing experts expect rates to remain in this current range for the foreseeable future. So, waiting to move, downsize, or buy that first house might not be the best strategy. The current rate isn’t high enough to justify continuing to rent or living in a house with stairs when you need to move into a level floor plan. I am writing this a few days after shoulder surgery, so trust me when I say it’s not worth risking a fall to save a few dollars a month.

Our family finally found a town in Central Europe with a cheap hotel and a restaurant. Even though the restaurant was in an industrial park, it was good, especially for some spoiled Americans who sometimes forget how great our options usually are. The same is true with mortgage rates; maybe our current options aren’t so bad after all.

Have a blessed week.

www.FerventWM.com

This article was written by humans for humans because AI doesn’t have this quality of sarcasm.

Securities and advisory services offered through LPL Financial, a registered investment advisor, Member FINRA/SIPC. Opinions voiced above are for general information only & not intended as specific advice or recommendations for any person. All performance cited is historical & is no guarantee of future results. All indices are unmanaged and may not be invested directly.

All investing involves risk, including loss of principal. No strategy assures success or protects against loss. The economic forecast outlined in this material may not develop as predicted & there can be no guarantee that strategies promoted will be successful. There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.

Source: 1.https://www.freddiemac.com/pmms 2. https://www.fhfa.gov/data/dashboard/nmdb-outstanding-residential-mortgage-statistics

Fervent Wealth Management is a financial management and services entity in Springfield, Missouri.