Why are US stocks rallying despite Fed rate shock? Aswath Damodaran explains in the context of AI

Economic Times - Oct 9, 2026

US stocks have defied a sharp rise in Treasury yields as AI-led earnings growth offsets pressure from higher interest rates, says valuation expert Aswath Damodaran. However, with equity risk premiums falling below 4%, he warns that the rally hinges on whether AI investments can deliver the profits investors expect, raising the risk of a sharp market correction.

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