The S&P 500 fell 0.45% on Sept. 15, 2026 as the 10-year Treasury yield climbed to 5.012% and crude oil jumped 5.12%. Rising earnings estimates have offset the drag from higher yields so far, but Mott Capital Management's Michael Kramer warns that cushion could vanish if bond-market volatility picks up.
The S&P 500 dropped 0.45% to 7,586.00 as the 10-year Treasury yield rose to 5.012% and crude oil climbed 5.12% to $106.58 a barrel. The Nasdaq Composite fell 0.75%, the Dow dropped 0.78%, and the VIX rose 2.92% to 17.60.
Earnings growth is offsetting the yield pressure
According to Mott Capital Management's Michael Kramer, the S&P 500 is trading at about the same level it was on June 2, when the 10-year yield stood at 4.45%. The Nasdaq-100, however, is down about 5% from its June 2 closing high.
Kramer notes the forward P/E ratio has fallen to around 19.1, down from 21.3 on June 2, a contraction of more than 9%. Over the same stretch, earnings estimates have grown 12.6%, from around $356 to $401, offsetting the multiple contraction. As a result, the S&P 500 earnings yield has risen to 5.2% from around 4.7% since June 2, meaning stocks are technically cheaper even though prices haven't moved.
Two scenarios for the index
If earnings estimates were to drop back to $356 while the P/E ratio held at 19.3, the S&P 500 could fall to around 6,870, Kramer estimates. Alternatively, if the 10-year yield rose to 5.25% while earnings growth stalled, the index could land near 7,280, based on the current spread between yields and the earnings yield.
Bond-market calm is the other cushion
Bond-market volatility has stayed low even as rates have climbed, unlike in 2022, when rising rates coincided with falling earnings estimates and a sharp jump in bond market volatility. The 60-day rolling correlation between the MOVE Index and the S&P 500 currently sits around -0.29, a relatively weak relationship that tends to strengthen when volatility rises quickly.
Kramer's conclusion is that the real risk isn't a specific yield level. It's what happens if rising rates eventually weaken earnings expectations and push bond-market volatility higher at the same time.
Source: MarketWatch
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