Stocks swung through a volatile week as surging Treasury yields and rising expectations for additional Federal Reserve rate hikes collided with renewed strength in technology names. The tech-heavy Nasdaq led the major averages, rising 2% for the week, while the S & P 500 jumped 1%. The Dow Jones Industrial Average eked out a 0.3% gain, after spending much of the week in negative territory as fears of higher rates weighed particularly on financial and consumer stocks. Here's a closer look at the three developments that drove the action in our portfolio last week. Rates become an even bigger hurdle for stocks Treasury yields surged to multidecade highs last week as strong economic data and hawkish Federal Reserve commentary raised expectations for more rate hikes. The 10-year yield topped 5.2%, reaching levels last seen in 2007 , while the 30-year touched 5.5%, its highest since 2004 . A stronger-than-expected manufacturing purchasing managers index report Wednesday showed resilient manufacturing conditions alongside intensifying price pressures. Normally, strong economic data would be good news, but with inflation still elevated, it gives the Fed more room to tighten policy. Fed Governor Michael Barr added to those concerns by saying "further policy adjustments are likely to be needed." Oil provided another source of inflationary pressure, with Brent crude climbing as high as $108 a barrel before easing on reports that Iran asked the U.S. to return to the interim peace deal that failed to end the war over the summer and proposed reopening the strategically vital Strait of Hormuz. The market odds of an October Fed rate hike went to 66%, up from about 57% a week earlier, according to the CME FedWatch tool . Higher rates tend to slow economic activity by making borrowing more expensive and bonds more competitive with stocks for investment dollars. However, a sustained decline in oil could help ease some of the pressure on inflation and rates. Meta's Muse strategy wows market At its annual Meta Connect conference Wednesday, Meta CEO Mark Zuckerberg laid out plans to build a broader ecosystem around Muse, the company's fast-growing personal AI agent. Muse has already climbed to the top of the app charts since launching earlier this month, and Meta is now integrating it across its hardware and Family of Apps to create more ways to use — and eventually monetize — the technology. The Facebook and Instagram parent plans to generate revenue from Muse through paid subscriptions and, eventually, to take a small fee on transactions completed by the agent. New partnerships with Walmart , Best Buy , Gap and Shopify will expand what Muse can do autonomously, while new smart glasses, virtual-reality glasses and an experimental Muse Charm will give consumers more ways to interact with it. The announcements strengthen the case that Meta can turn its more than $100 billion in annual AI spending into businesses beyond advertising. Investors are finally starting to give Meta the credit it deserves . Shares are up roughly 13% last week, making it the portfolio's second-best performer. The stock surged more than 11% Monday alone, its best day since April 2025, and is now approaching a $2 trillion market cap . Even after the rally, Meta trades at about 23 times forward earnings, only modestly above the S & P 500. Microsoft's turnaround gains credibility Wall Street is coming around to our view that Microsoft has turned a corner. Stifel upgraded the stock to buy last week, while two other firms raised their price targets . Analysts cited accelerating Azure growth and improving confidence in the company's AI investments. Azure revenue growth accelerated to 43% during its fiscal 2026 fourth quarter and is expected to pick up again this quarter, even as Microsoft holds the line on its capital spending outlook. That combination is important. Investors have questioned whether hyperscalers can generate sufficient returns on their enormous AI investments, but Microsoft is showing it can bring more capacity online, accelerate cloud growth, and remain free cash flow positive. That's a major shift from earlier this year, when fears of AI disruption, concerns about Copilot, and heavy data center spending weighed on the stock. Azure has since reaccelerated, and Copilot has surpassed 30 million paid seats. Microsoft shares rose more than 4% last week and turned positive for the year, a remarkable comeback for a stock that had fallen 20%. We're sticking with the stock after raising our price target to $550 earlier this month. As portfolio director Jeff Marks said Wednesday , Microsoft is "one of the few hyperscalers that is living within their means." We maintain our hold-equivalent 2 rating and would wait for a better opportunity to add after the rally since July. (See here for a full list of the stocks in Jim Cramer's Charitable Trust.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust's portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
From CNBC Tech
By CNBC Tech
September 26, 2026
