Key facts
- Edward Jones CEO Penny Pennington believes the bull case for stocks remains intact despite rising bond yields.
- Pennington cited strong economic growth and enthusiasm for the AI trade as key drivers for the stock market.
- The CEO expressed confidence in the US market, stating, 'I'm just never going to bet against America.'
- The benchmark 10-year US Treasury yield reached its highest level since 2002 this week.
- The US economy is projected to grow at 3.7% in the third quarter, per Atlanta Fed GDPNow.
- Disruptions in the AI sector are seen as a greater potential risk to stocks than higher interest rates.
The chief executive of Edward Jones, Penny Pennington, stated that a significant increase in bond yields has not diminished the positive outlook for the stock market. She believes that robust economic growth and investor enthusiasm for artificial intelligence are sustaining the bull market.
Pennington told Business Insider on Thursday that the market is currently experiencing a 'Wall of Worry' but remains in a 'risk on' phase. She expressed a strong belief in the US market's potential for superior returns compared to global equities, stating, 'I'm just never going to bet against America.'
The recent surge in Treasury yields, particularly the benchmark 10-year yield reaching its highest level since 2002, has raised concerns about inflation and the possibility of higher interest rates from the Federal Reserve. However, the market has shown resilience, with yields exceeding the 5% threshold, a level previously considered a critical point for concern regarding stock prices.
Factors supporting the stock market include strong economic indicators, such as an expected third-quarter GDP growth rate of 3.7% according to the Atlanta Fed's GDPNow model, and business expansion reaching its fastest pace in five years in September, as reported by S&P Global. Analysts also cite strong corporate earnings and optimism surrounding the AI sector as key contributors to stock market strength.
Pennington suggested that any significant disruption to the stock market would more likely originate from the AI sector rather than from rising interest rates. The tech sector has experienced volatility due to evolving investor sentiment around AI agents and broader AI concerns, though the Roundhill Magnificent Seven ETF, which tracks major AI-focused tech companies, has seen a 6% increase in the past month.