09/26/2026
Compare DJIA vs. Nasdaq today. Get used to this gap. The Nasdaq finished within about 1% of the high set just Tuesday, and on the year the gap is over 2x (+15.9% vs. +6.8%). The bond market is sending the same signal: the 5-year Treasury yield is at its highest since 2007 and investors are pricing in nearly four rate hikes, hitting levered, rate-sensitive old-line balance sheets hardest while barely touching cash-rich tech platforms paying for AI mostly out of operating cash flow.
The gap exists despite the inclusion of NVDA, MSFT, AMZN in the DJIA, suggesting a broader shift! Higher rates accelerate that shift. The largest tech companies aren't a sector; they're conglomerates adding verticals like power, healthcare, finance and media, and taking a bigger share of index weight, earnings and GDP each year. Some legacy companies will make that transition and reprice as technology businesses, while more will consolidate or whither.
This is not a cycle, it's the permanent shift we've discussed for some time, but it's happening now.
