Wall Street keeps rising, even as U.S. households keep getting more discouraged

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NEW YORK (AP) — The split between Wall Street and most U.S. households grew wider Friday, as U.S. stocks rose toward the finish of an eighth straight winning week, their best such streak since 2023. That’s even though a survey showed U.S. consumers are feeling even worse about the economy.

The S&P 500 added 0.6 per cent and pulled closer to its all-time high set in the middle of last week. The Dow Jones Industrial Average was up 434 points, or 0.9 per cent, as of 2:40 p.m. Eastern time, and the Nasdaq composite was 0.5 per cent higher.

Ross Stores helped drive the market and rose 7 per cent after the off-price retailer reported profit and revenue for the latest quarter that easily cleared analysts’ expectations. CEO Jim Conroy said it saw strong customer traffic through the three months, and the company may have benefited from households spending their tax refunds.

Estee Lauder jumped 11.2 per cent after saying it was no longer considering a possible merger with Puig, the Spanish fragrance and beauty products company.

Workday rose 5.6 per cent, and Zoom Communications jumped 10.8 per cent after both delivered better profit reports for the latest quarter than analysts expected.

They’re the latest companies to top analysts’ expectations for profits for the start of 2026, and the cavalcade of such reports has helped U.S. stocks remain near their records. Stock prices tend to follow the path of corporate profits over the long term.

The strength is coming even after a survey of U.S. consumers by the University of Michigan found sentiment fell to a record low, piercing below a bottom in 2022 when inflation peaked above 9 per cent. Households are feeling worried about how bad inflation is now because of expensive oil created by the war with Iran.

U.S. consumers are forecasting inflation will worsen to 4.8 per cent in the coming 12 months, up from a forecast of 4.7 per cent last month, according to the survey. In the longer run, their forecasts for inflation jumped to 3.9 per cent from 3.5 per cent last month. Such rising expectations are a concern for economists because they can drive behavior that creates a vicious cycle that makes inflation worse.

Sentiment dropped in particular for lower-income consumers who are least able to absorb more expensive essentials, and it fell for Republicans as well, according to the survey.

Helping to keep uncertainty high have been continued swings for oil prices. They yo-yoed again on Friday, like they did through the week on uncertainty about when the United States and Iran may find a deal to reopen the Strait of Hormuz. Its closure has prevented oil tankers from exiting the Persian Gulf and delivering crude to customers worldwide.

The price for a barrel of Brent crude oil, the international standard, was last up 0.7 per cent to US$100.23. Benchmark U.S. crude, meanwhile, rose 0.3 per cent to settle at US$96.60 per barrel.

Worries about inflation staying high have pushed bond yields higher worldwide, threatening to slow economies and undercut prices for stocks, bitcoin and all kinds of other investments. High yields have already forced the average long-term U.S. mortgage rate to its most expensive level since last summer, and they could curtail companies’ borrowing to build the AI data centers that have supported the U.S. economy’s growth  recently.

Yields had been down Friday morning, offering some relief, then briefly climbed after oil prices erased their losses and the survey on consumer sentiment showed worsening inflation expectations.

The yield on the 10-year Treasury slipped to 4.56 per cent, down from 4.57 per cent late Thursday, and remains well above its 3.97 per cent level from before the war.

Worries about inflation have climbed so high that traders on Wall Street have eliminated bets that the Federal Reserve will resume its cuts to interest rates this year. Lower rates would give the economy a boost, but they could also worsen inflation.

An important member of the Fed, Gov. Christopher Waller, said in a speech 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.”

But he also said that is not the case now, and it “is time to simply sit and watch how the conflict and the data evolve” in his speech titled “Policy Risks Have Changed.”

In stock markets abroad, indexes rose across much of Europe and Asia.

Japan’s Nikkei 225 climbed 2.7 per cent to another record after a report showed inflation hitting a four-year low in April, at 1.4 per cent, despite higher prices for oil and gas due to the war.

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Stan Choe, The Associated Press. Chan Ho-him And Matt Ott, The Associated Press.