S&P 500 earnings surge faces Treasury yield pressure as equity premium turns negative

The S&P 500 (^GSPC) is trading near records as earnings growth accelerates, but higher Treasury yields are challenging stock valuations, according to Yahoo Finance on May 14, 2026. The index’s realized earnings yield is about 3.4%, below the 10-year Treasury yield (^TNX) near 4.5%, leaving a negative gap of roughly 110 basis points. That is the widest negative reading since 2003 and suggests investors are receiving less current earnings yield from equities than from government debt. The signal is less severe on forward estimates. Using forward earnings, the S&P 500’s earnings yield is about 4.5%, slightly above the 10-year yield. The setup implies stocks can maintain their edge only if profit growth continues. A sustained move in the 10-year yield above 4.6% would increase the relative appeal of bonds and put more pressure on equity valuations.