Stocks Surge Amid Declining Consumer Confidence

(SeaPRwire) –   The divergence between the performance of Wall Street and the outlook of American households intensified on Friday, as U.S. equities concluded their eighth consecutive week of gains—the longest winning streak since 2023. This market optimism persists despite data indicating that consumer confidence in the economy is deteriorating.

The S&P 500 climbed 0.4%, nearing the record high established mid-week. Meanwhile, the Dow Jones Industrial Average advanced 294 points, or 0.6%, and the Nasdaq composite rose 0.2%.

Market momentum was bolstered by Ross Stores, which surged 8.1% after the retailer’s quarterly earnings and revenue figures surpassed analyst projections. CEO Jim Conroy attributed the success to robust foot traffic, noting that the company likely benefited from consumers utilizing tax refunds.

Estee Lauder shares jumped 11.9% following the company’s announcement that it is no longer pursuing a potential merger with the Spanish beauty and fragrance firm, Puig.

Additionally, Workday and Zoom Communications saw gains of 5.2% and 9.2%, respectively, after both companies reported quarterly profits that exceeded market expectations.

These results are part of a broader trend of companies beating early 2026 earnings forecasts, a factor that has helped keep U.S. stock prices near record levels, as equity valuations generally track corporate profitability over the long term.

This market strength contrasts with a University of Michigan survey showing U.S. consumer sentiment has hit a record low, falling below the 2022 trough observed when inflation exceeded 9%. Households are increasingly anxious about current inflationary pressures, driven by rising oil costs stemming from the conflict with Iran.

According to the survey, consumers anticipate inflation will reach 4.8% over the next year, up from the 4.7% projection made last month. Long-term inflation expectations also rose to 3.9% from 3.5%. Economists warn that such escalating expectations can trigger behaviors that fuel a self-reinforcing cycle of higher inflation.

The survey highlighted that sentiment has declined most sharply among lower-income households—who are least equipped to manage rising costs for essential goods—as well as among Republican respondents.

Market volatility remains elevated due to fluctuating oil prices. Crude prices shifted throughout the week amid uncertainty regarding a potential U.S.-Iran agreement to reopen the Strait of Hormuz, the closure of which has disrupted global oil shipments from the Persian Gulf.

Brent crude for August delivery rose 0.7% to settle at $100.21 per barrel, recovering from earlier losses.

Concerns over persistent inflation have driven global bond yields higher, creating risks for economic growth and asset prices. Elevated yields have already pushed average long-term U.S. mortgage rates to their highest levels since last summer and could potentially hinder corporate investment in the AI data centers that have recently served as a pillar of U.S. economic expansion.

Yields initially dipped on Friday morning before rising again as oil prices recovered and the consumer sentiment report signaled worsening inflation expectations.

The 10-year Treasury yield settled at 4.56%, down slightly from 4.57% on Thursday, though it remains significantly higher than the 3.97% level recorded prior to the conflict.

Inflationary fears have become so pronounced that Wall Street traders have abandoned expectations for Federal Reserve interest rate cuts later this year. While lower rates would stimulate the economy, they also carry the risk of exacerbating inflation.

Federal Reserve Governor Christopher Waller remarked in a speech on Friday, “If I believe inflation expectations start to become unanchored, I would not hesitate to support an increase in the target range for the federal funds rate.”

However, in his address titled “Policy Risks Have Changed,” Waller noted that this is not currently the case, suggesting that for now, “it is time to simply sit and watch how the conflict and the data evolve.”

International markets also saw gains across Europe and Asia.

Japan’s Nikkei 225 rose 2.7% to reach a new record, following a report that showed inflation at a four-year low of 1.4% in April, despite the impact of higher energy prices due to the war.

On Wall Street, the S&P 500 closed at 7,473.47, up 27.75 points. The Dow Jones Industrial Average gained 294.04 points to reach 50,579.70, and the Nasdaq composite rose 50.87 points to 26,343.97.

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AP Business Writers Chan Ho-him and Matt Ott contributed to this report.