The chief executive of Edward Jones, one of the nation’s largest investment advisory firms, said on Thursday that the sell-off in government bonds should not drive investors out of stocks, even as Treasury yields climbed to their highest levels in more than two decades.
Penny Pennington told Business Insider that the bull market is still being carried by strong economic growth and enthusiasm for artificial intelligence, and that her firm remains overweight on stocks. “We’re still risk on,” she said. “The market seems to be climbing a Wall of Worry right now.”
The yield on the benchmark 10-year Treasury note rose this week to its highest level since 2002, moving above 5.3 percent as investors worried about inflation and predicted that the Federal Reserve would hold interest rates higher. Five percent has long been treated as the level where yields start to pressure share prices, and the rise also reads as a judgment that the American economy is strong enough to absorb more expensive borrowing. Stocks, so far, have taken the strain.
Ms. Pennington pointed to the economy as the explanation. The Atlanta Fed’s GDPNow model estimates that gross domestic product will grow at a 3.7 percent pace in the third quarter, and S&P Global said private-sector business growth in September was the fastest in five years. Business Insider noted that Wall Street analysts have also credited strong corporate earnings and renewed optimism around artificial intelligence for keeping the rally going.
If anything knocks stocks off course, Ms. Pennington said, it is likelier to come from a rupture in the AI sector than from interest rates — the one “wild card” she identified. Tech shares have swung in recent months as investors toggled between fears about what AI might displace and excitement over AI agents. The Roundhill Magnificent Seven ETF, which tracks the seven tech giants at the center of the trade, is up 6 percent over the past month.
On the question of whether the United States market can keep outpacing the rest of the world, she said: “I’m just never going to bet against America.”