Nasdaq hits record 27,477 as Ray Dalio warns US debt could trigger 2029 crisis

Artificial intelligence drives equity records

Wall Street closed higher on Monday, led by technology and semiconductor shares tied to artificial intelligence expansion. The Nasdaq Composite advanced 1.05% to a record finish of 27,477.31, while the S&P 500 gained 0.66% to end at 7,773.95 and the Dow Jones Industrial Average added 0.18% to 51,267.90. Individual gainers included chipmaker Cerebras Systems, which rose 9% following public remarks from OpenAI chief executive Sam Altman describing the firm as a close partner. SpaceX shares gained approximately 5% to 6%, Tesla rose over 2%, and Meta Platforms and Microsoft posted gains of 1.9% and 1.48% respectively. In broader corporate moves, freight broker RXO surged over 22% after C.H. Robinson Worldwide agreed to buy the company in a cash-and-stock transaction valued at $5.8 billion.

High Treasury yields and credit divergence

Equity gains occurred alongside rising yields on sovereign debt, reflecting expectations that persistent inflation will keep Federal Reserve policy rates elevated. The yield on the benchmark 10-year US Treasury note rose over six basis points to finish between 5.31% and 5.341%, marking its highest close since April 2002. The 30-year Treasury bond yield climbed approximately seven basis points, reaching between 5.66% and 5.699%. Market analysts pointed out that robust cash flows have insulated large technology operators from higher borrowing expenses.

Jay Hatfield, founder and president of Infrastructure Capital Advisors, noted the resilient investor appetite for technology shares in comments to CNBC.

It doesn't really matter what they pay for debt, and demand for compute is so large that interest rates don't have much impact on tech.

Dalio issues three-year debt warning

In an interview with Bloomberg Television on Tuesday, Bridgewater Associates founder Ray Dalio presented a stark assessment of the US sovereign balance sheet. Dalio cautioned that the United States is heading toward a debt crisis within the next three years, projecting severe fiscal stress by autumn 2029. Total US federal debt surpassed $40 trillion in August 2026, representing an inflation-adjusted increase of more than 33% since 2019. Annual debt servicing costs have crossed $1 trillion, consuming 21% of the federal budget and squeezing funding for defense, healthcare, and education. Dalio also observed that heavy debt financing across the artificial intelligence boom risks tightening credit for riskier sectors.

When debts rise faster than they are repaid, the cost of servicing them increases. It becomes an increasingly large share of cash flows. And when that happens, it begins to crowd out spending. That's when the problem begins.

Widening trade deficit pressures growth

Macroeconomic data released for August showed the US trade deficit widening past market forecasts, driven by record inbound shipments. Total imports expanded 4.3% to $420.8 billion, lifted by a $9.1 billion rise in industrial materials such as crude oil and non-monetary gold, alongside a $6.2 billion increase in capital goods including semiconductors. Exports increased by a smaller 1.4% to $315.2 billion, leaving the inflation-adjusted goods gap at $114.7 billion. The Federal Reserve Bank of Atlanta GDPNow tracking model estimated that net exports will subtract 2.59 percentage points from third-quarter GDP growth. Energy markets saw crude ease slightly after the Group of Seven and the International Energy Agency agreed to release 100 million barrels of petroleum from strategic reserves.