Wall Street ended the week higher, though investors navigated sharp swings tied to Treasury yields, Middle East tensions, and another pivotal Nvidia earnings report. Early in the week, concerns about an inflationary shock tied to the Middle East conflict pushed Treasury yields higher and pressured equities. The 30-year Treasury yield climbed above 5.18% at one point, its highest level in nearly two decades, as investors reassessed the possibility that persistent inflation could keep rates elevated for longer.
Nvidia remained the market’s focal point. The company reported results and guidance above expectations, though the stock finished lower in the session after earnings as investors debated whether the sector’s massive rally can continue.
For the week, the Dow Jones Industrial Average gained 2.1%, the S&P 500 rose 0.9%, and the Nasdaq Composite added 0.5%.
Future Wealth’s View
When NVidia’s results beat expectations and provided guidance above expectations and yet the stock traded down the next day, the market is telling you the discount rate matters more than the growth rate. That sentiment was reinforced when Walmart took a $175 million fuel cost hit and warned it’s getting worse. Home Depot and Lowes echoed the same.
Consumer sentiment hit 44.8, its lowest reading in survey history for the third straight month. Gas is at $4.55 per gallon, up 53% since the war began. The Iran war premium isn’t just oil anymore. That crossed a line this week that most investors haven’t drawn yet. But the market continues to move higher even as the rise of buy now, pay later services hit new highs as consumer debt hits record levels.
Americans are now struggling with mounting debt, high gas prices and persistent inflation – sending consumer sentiment to a record low. Now, retailers like Walmart, Home Depot and Lowes are getting louder about their warnings that spiking fuel costs driven by the war with Iran will soon be reflected in the prices of products on their shelves.
This movie could have a bad ending.