Stocks are powering through bond market angst with considerable punching power this month, setting fresh record highs and instilling a renewed sense of optimism heading into the third-quarter earnings season.

The tech-focused Nasdaq Composite index has led the charge, rising 3.3% from the Sept. 29 close with another all-time high likely by the close of trading Tuesday. For the year, the benchmark is up just over 19%.

The S&P 500 index has added nearly 2oo points since Oct. 1, putting a fresh record high firmly in sight. It has also extended its 2026 advance to a solid 14.5%, effectively matching the gains recorded over the same period last year.

Curiously, both indexes are finding their feet after a long summer lull, which saw the S&P 500 gain just 2.5% from mid-May until the end of August amid global bond market chaos and surging U.S. Treasury bond yields.

Benchmark 10-year Treasury note yields are trading just shy of the 5.3% mark, having hit the highest close since 2002 on Monday, and are nearly a full percentage point higher than they were at the end of June.

Longer-dated 30-year bonds haven't fared much better, rising around 80 basis points over the same time frame to 5.695% earlier this week, the highest level since 2002.

Those kinds of moves, tied to a host of factors -- from the surge in global crude prices linked to the Iran war, the staggering growth of the national deficit, and the stiff competition for capital from highly rated borrowers in the artificial-intelligence space -- would normally snuff out any hopes of a stock market rally.

But investors are betting this time is different.

Bond yields are largely tracing moves in the oil market, which are tied to hopes for a conclusion to the Iran war, now entering its eighth month. That could suggest investors see light at the end of the surging yield tunnel, even with the fiscal overhang, if a peace agreement can be reached and normal shipping can be restored through the Strait of Hormuz.

Bets on another Federal Reserve interest-rate hike, meanwhile, are getting pared back following weaker-than-expected data from the job market and easing inflation pressures tied to the pullback in crude prices.

Stocks could have a clear path for gains over the final three months of the year if a retreat in yields, softening inflation data, and continued gains for the domestic economy help lift stocks that are outside of the once-again dominant tech sector.

Nvidia is closing in on a $6 trillion valuation, and may have finally broken free from its long summer torpor, while a Magnificent Seven index has powered 8.3% higher since early September.

The tech sector itself, in fact, remains the only one of 11 in positive territory for the past month, with a 7.3% gain, with Goldman Sachs noting Tuesday that overall market breadth is trending at the narrowest levels since the early 2000s.

That leaves either a lot of heavy lifting for tech over the final months of the year, starting with the third-quarter earnings season, in order for stocks to continue their early October pace.

LSEG data suggest that the three sectors that house the Mag Seven and tech-sector giants will contribute nearly half of the S&P 500's $770 billion in September-quarter earnings, and more than 52% of the $804 billion penciled in for the final three months of the year.

So, in many respects, the battle for market supremacy over the next few weeks, and likely after the midterm elections as well, will center on whether investors will push tech stocks higher or bow to the bond market slump that has pressured markets around the world.

Tech has punched back hard this month, and earnings could follow with a knockout blow. But the bond market isn't a slugger, it's a jabber, snuffing out enthusiasm with relentless blows that exhaust investor patience. Either tech or bonds will remain standing by the end of the year. The other will likely head back to its corner to tend its wounds and prepare for the next fight.

Right now, at least, tech is ahead on the judges' scorecards.