Wall Street rises as pressure eases from the bond market

U.S. stocks climbed toward record highs Friday, marking an eighth consecutive winning week—the best streak since 2023—even as consumer confidence plunged to a record low. The S&P 500 gained 0.7%, the Dow Jones Industrial Average rose 0.8% (408 points), and the Nasdaq increased 0.6%. Strong earnings reports drove gains: Ross Stores surged 6.5% after beating quarterly profit and revenue expectations, citing high customer traffic, while Estee Lauder jumped 9.9% after abandoning merger talks with Spanish beauty firm Puig. Workday and Zoom also outperformed, rising 3.9% and 11.1%, respectively, after reporting better-than-expected profits. The rally contrasts sharply with a University of Michigan survey revealing worsening consumer sentiment, dropping below 2022’s inflation-peak low. Households anticipate inflation worsening to 4.8% over the next year and 3.9% long-term, up from prior forecasts. Lower-income consumers and Republicans showed the steepest declines, reflecting concerns over rising costs for essentials amid volatile oil prices. Brent crude climbed 1% to $103.60 per barrel, and U.S. benchmark crude rose 0.7% to $97.04, influenced by uncertainty over a potential U.S.-Iran deal to reopen the Strait of Hormuz, which has disrupted global oil shipments. Higher bond yields, driven by inflation fears, have pushed long-term U.S. mortgage rates to their highest since summer, threatening to slow economic growth. Elevated yields also weigh on stocks, Bitcoin, and other assets by increasing borrowing costs. Economists warn rising inflation expectations could trigger a self-reinforcing cycle, further pressuring markets and consumer spending. The disconnect between Wall Street’s gains and broader economic pessimism highlights tensions between corporate performance and household struggles. While profit-driven stocks near all-time highs, consumer confidence remains fragile, underscoring divergent outlooks. Analysts note stock prices typically follow corporate earnings trends over time, but persistent inflation and geopolitical risks could test market resilience in the coming months.