The Nasdaq Composite reached a new closing high, Nvidia approached 6 trillion dollars, but last night's most extreme market movement was in biomedicine.

Introduction: On October 5th, there was an intriguing combination in the U.S. stock market: the 10-year Treasury yield closed above 5.30%, yet the Nasdaq reached an all-time closing high; on the same day, a biotech stock nearly doubled in pre-market trading. While the index hit a new high, the market internally displayed divergence - this combination is worth dissecting.

1. The Most Extreme Gain Last Night Was Not in the Index

The market seemed lively that day: 10 of the 11 sectors of the S&P 500 rose while one fell, with materials (+1.22%) and communication services (+1.14%) leading the gains. However, the truly extreme movement occurred in the biotech sector.

Vaxcyte (PCVX) saw a pre-market surge of over 85%, triggered by its 31-valent pneumococcal conjugate vaccine VAX-31 achieving all predefined primary endpoints in a pivotal Phase 3 trial (OPUS-1). According to the company’s disclosures and reports, in a head-to-head design across approximately 30 research centers and over 4,000 subjects, VAX-31 met non-inferiority standards for all 20 serotypes shared with Pfizer’s Prevnar 20 and 17 out of 19 serotypes shared with Merck's Capvaxive, while showing superior efficacy on its unique serotypes; its tolerability was comparable to the control vaccine. By the close, the gain receded to 30.7%, priced at $73.82. Also boosted in the sector were Novavax (NVAX), which rose about 20%, and Moderna, which climbed nearly 7%.

It is essential to view this with objectivity: meeting non-inferiority is a high standard outcome under this trial design, but "meeting the standard" does not equal "better," and according to public reports, the company still requires results from two additional trials before submitting its application for market approval. There remains uncertainty regarding the clinical trial data's subsequent fulfillment.

This is a day worth in-depth investigation. While the 10-year Treasury yield remains above 5.3%—reportedly the highest level since 2002—the Nasdaq reaches a historical high, and a biotech stock nearly doubles in pre-market trading. What exactly is the market betting on? Let’s break it down.

2. Nvidia: A Step Away from $6 Trillion

Nvidia rose 2.12% that day to close at $238.9, touching an intraday high of $240.1, with a market capitalization of approximately $5.79 trillion—about 3.7% away from the $6 trillion mark. On October 2nd and 5th, its intraday highs successively broke historical records; in just about a year, it has crossed from a market cap of about $5 trillion (end of October 2025) to nearing $6 trillion.

According to implied pricing in the options market (as reported), the probability of Nvidia's market cap exceeding $6 trillion this month is approximately 50%, about 13% this week, and around 67% before December 18th.

What drives Nvidia's strength is less about new news that day, but rather the $150 billion stock buyback authorization announced on September 28th—termed the largest in history in public reports. A senior strategist at an asset management firm commented on this, saying: "Stock buybacks are more than just shareholder returns; they represent a capital allocation event reflecting confidence in long-term AI demand."

However, there has been a clear divergence within the chip sector. The Philadelphia Semiconductor Index saw a brief dip during the day (according to public market data, about -1%), closing up only 0.27%; AMD, Intel, Micron Technology, ASML, etc., weakened, while TSMC and Broadcom rose over 2%. Funds have been making more precise selections within the AI chain—core computing targets continued to be bought, while traditional semiconductors and memory faced pressures.

3. SpaceX: Musk Returns to $1 Trillion Billionaire

SpaceX (SPCX) closed up 7.63% to $171.09, reaching a new high since mid-June. A U.S. large bank reportedly maintained an ‘overweight’ rating and a $300 target price in a weekend report, with core logic directed at the growth potential of the Starship test flights and AI business; the bank noted that the quarterly earnings report set for late October and the next Starship test flight are two key time windows to watch, believing that if SpaceX attempts to recover the upper stage of the Starship in the next test flight, it could become one of the most significant catalysts since the company went public.

As a result, Musk's wealth has once again surpassed $1 trillion: according to Forbes' real-time billionaire rankings, including his shares in Tesla and SpaceX, it stands at about $1.03 trillion. He first became a trillionaire on June 12 after SpaceX's IPO but subsequently saw a drop in stock price, briefly losing that title in just over ten days; at the time, he even referred to himself on social media as a "former trillionaire."

More noteworthy is the shift in SpaceX's valuation anchor: moving from "launch frequency" and "Starlink user numbers," gradually turning towards "computing connection capabilities." The company acquired Musk's xAI in February this year and recently purchased Cursor, while generating substantial income by leasing computing resources to companies like Google and Anthropic; defense contracts have accumulated to over $12.7 billion, with the Pentagon announcing last week that Musk and others will jointly lead Project Meridian, researching potential weapons and technologies required for America's future wars.

4. Chinese Concept Stocks: Behind the Independent Market

The Nasdaq Golden Dragon China Index closed up 1.71%. WorldData and CenturyLink both rose over 6%, Alibaba up over 4%, Baidu, Hesai Technology, and Vipshop each rose over 3%, while JD and Bilibili rose over 2%.

The recent rebound of Chinese concept stocks has a relatively weak correlation with U.S. Treasury rates. One heavily discussed explanation in the market is: Chinese concept stocks are generally less sensitive to U.S. Treasury yields compared to high-valuation growth stocks in the U.S.—when the 10-year Treasury yield stands above 5.3%, the valuation anchor of US growth stocks is suppressed, while the relatively large adjustment of Chinese concept stocks previously has led to valuations being at relatively low levels, giving funds the motivation to make short-term valuation repairs. In addition, multiple factors such as company performance, liquidity, and policy expectations are also playing roles together.

5. But the Market Internally Is Splitting

While the Nasdaq hit a historic high, the market "breadth" continues to worsen.

The chief equity strategist at a U.S. large bank pointed out in a recent report: among the components of the Russell 3000 Index, 51% have fallen more than 20% from their June highs, entering bear market territory as typically defined; the median stock in the S&P 500 is down 16% from its 52-week high, with market breadth dropping to its lowest level since the internet bubble burst. This strategist estimates that there is currently about a 12% divergence gap between the breadth of the U.S. stock market and index prices—this divergence typically needs to converge in some way: either the index corrects downwards to "meet" the market breadth, or bond volatility cools, and individual stocks rebound to widen the market again.

In looking at sectors, the damage distribution is extremely uneven. In the semiconductor sector, 96% of stocks have retreated over 20% from their June peaks (with 69% dropping over 40%); in the software sector, this proportion is 75%, and 71% in the automotive sector; the banking sector is the only exception with only 4% experiencing a similar magnitude of retreat.

It is also worth noting the timing of this cleaning. Throughout the summer, the proportion of S&P 500 component stocks above the 200-day moving average rose from 59% at the end of May to about 75%—even amid rising crude oil and Treasury yields, breadth remained improving; however, this trend sharply reversed after the Jackson Hole global central banking conference in late August, currently falling to 49%. This strategist believes that the sudden narrowing of breadth is not triggered by rising oil prices but is due to the market beginning to digest a more hawkish Federal Reserve path after Jackson Hole.

Another divergence worth heeding is that the MOVE index, which measures U.S. Treasury volatility, has surpassed 100, while the VIX panic index remains below 15. This strategist warns that if bond volatility cannot calm down, there is a possibility that the S&P 500 may dip into the range of about 6800 to 7300 points within the next month (this institution's scenario projection, not a deterministic forecast).

6. Earnings Still One of the Current Main Supports

Investors are willing to hold tech stocks in a 5.3% interest rate environment, with one core basis being earnings growth. According to FactSet data, analysts predict that the S&P 500 component stocks' earnings in Q3 will increase nearly 30% year-on-year; if realized, this would mark the third consecutive quarter of growth exceeding 25%.

However, this growth increasingly relies on a few AI-weighted stocks. Nvidia's market cap moved from about $5 trillion to $5.79 trillion in just about a year, while nearly half of the stocks in the Russell 3000 are actually experiencing their own bear markets—new highs for the index and declines for most individual stocks are happening simultaneously.

A research institution linked to an Asian bank believes that Nvidia's current price-to-earnings ratio, combined with an expected earnings growth rate of about 70% next year, indicates that AI-driven tech stocks are still far from a typical bubble; another U.S. large bank reportedly maintains its 'overweight' view on U.S. stocks, giving a 12-month target point for the S&P 500 of 8600 points. This view only reflects the judgment of the related institution. However, the above strategist’s reminder is also worth noting: when half of the stocks have entered a bear market while the index is still hitting new highs, this structural concentration could amplify the index's downside risk when the interest rate environment changes.

In Conclusion

Last night's combination was: new index highs, high interest rates, deteriorating breadth, and a surprise in biotech. It suggests not a simple "bullish" or "bearish" stance, but rather structural differentiation - the earnings realization of a few heavyweight stocks, paralleled with the valuation declines of most individual stocks; rising interest rates have yet to crush earnings, but changes in bond volatility may be the next critical variable. The upcoming Q4 earnings season and Federal Reserve path are two verification points worth tracking.

Engage with us: The Nasdaq has reached a new high, but approximately half of the stocks in the Russell 3000 have entered bear market territory—what's your feeling about your holdings more closely aligned with which side? Feel free to discuss in the comments.

We will continue to track the changes in U.S. Treasury yields and market breadth.

Data Sources

Market data: Nasdaq 27,477.31 (+1.05%), S&P 500 7,773.95, Dow 51,267.90; the changes in Nvidia, SpaceX, Vaxcyte, etc. Closing data for October 5th, public market.
Treasury yields: 10-year settled above 5.30% (approximately 5.303%—5.307%). Closing data for October 5th, public market.
Breadth and institutions: 51% of the Russell 3000 fell over 20% from June highs, the median of the S&P 500 down 16% from 52-week highs, MOVE > 100, VIX < 15; institutional views from reports of U.S. large banks. In October, media references have been desensitized.
Nvidia: Market cap approximately $5.79 trillion; $150 billion buyback authorization. October 5th/September 28th, public market/company announcement.
Vaxcyte: VAX-31 met primary endpoints in Phase 3; pre-market gain exceeded 85%, closed up 30.7%. October 5th, company announcement/public reports.
Earnings: S&P 500 Q3 earnings growth rate predicted nearly 30%. October, FactSet.

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