What is driving the move?

1. Stronger-than-expected US economy
Fresh business-activity data pointed to continued economic strength. That reduces expectations for an imminent easing cycle and raises the possibility that monetary policy may need to remain restrictive for longer. 

2. Inflation + oil risk
Oil remains elevated amid Middle-East supply uncertainty. Higher energy prices can feed directly into inflation, complicating the Fed's effort to bring inflation back toward its target. 

3. Fed hike expectations are rising
The bond market is increasingly pricing the possibility of additional Fed tightening. The 2-year Treasury—particularly sensitive to Fed expectations—has also moved sharply higher, contributing to a flatter yield curve. 

Why Wall Street is reacting

The transmission mechanism is straightforward:

Strong economy → inflation risk → Fed hike expectations ↑ → Treasury yields ↑ → discount rates ↑ → equity valuations ↓

The immediate pressure is particularly visible in growth and technology stocks, where higher discount rates have a larger impact on present valuations. The Nasdaq was down about 1% intraday, versus roughly 0.5% for the S&P 500. 

Bottom line

5.12% on the 10-year is more than a psychological milestone—it represents a significant repricing of the U.S. interest-rate environment. Wall Street is now balancing strong economic activity against persistent inflation and the possibility of additional Fed tightening.

The bond market, rather than earnings, is currently setting the marginal price of risk.