The Powerful Yet Fragile Force Propping Up Stocks and the Economy

Despite all the turmoil in the bond market, both the stock market and the broader economy appear to be reasonably strong.

I pointed out one reason for this apparent anomaly last week. Oil prices and the war in Iran have driven up interest rates sharply, often dominating the financial news and causing hardship for millions of people. But while the rates on 10-year U.S. Treasuries have hit their highest level since 2002, those rates were considered normal in the era before the financial crisis that started in late 2007.

The world has certainly changed, though. A potent but fragile force is now propping up the stock market and the economy: the artificial intelligence industry.

For a measure of how important A.I. has become for the stock market, consider that the iShares U.S. Technology ETF, an exchange-traded fund that serves as a rough proxy for A.I.-led tech stocks, returned 33.7 percent for this calendar year through Thursday. That compares with 4.1 percent for the ProShares SP 500 Ex-Technology ETF, which strips out many, but not all, of the tech stocks of the benchmark SP 500.

Article source: https://www.nytimes.com/2026/10/02/business/ai-stocks-bonds-economy.html