Key facts
- U.S. stocks ended the week higher, marking an eighth consecutive winning week.
- The Treasury Department announced plans to increase purchases of longer-term Treasurys to provide liquidity support.
- Stronger-than-expected earnings reports from companies like Ross Stores, Estee Lauder, Workday, and Zoom Communications boosted market sentiment.
- Consumer sentiment dropped to a record low, with concerns about inflation linked to oil prices.
- Oil prices remained volatile amid uncertainty over the Strait of Hormuz.
U.S. stocks concluded their eighth consecutive winning week, with the S&P 500 and Dow Jones Industrial Average showing gains and approaching record highs. This positive momentum was bolstered by the U.S. Treasury Department's announcement on Wednesday to increase its purchases of longer-term Treasurys, a move aimed at easing pressure in the bond market. The yield on the 10-year Treasury subsequently fell to 4.64% from 4.71%, and the 30-year yield decreased to 5.18% from 5.28%.
Supporting the market rally were strong corporate earnings reports. Ross Stores, Estee Lauder, Workday, and Zoom Communications all reported profits and revenues that surpassed analyst expectations, contributing to the upward trend in stock prices. Estee Lauder's stock saw a significant jump after it announced it was no longer considering a merger with Spanish company Puig.
Despite the stock market's strength, consumer sentiment, as measured by a University of Michigan survey, reached a record low. Consumers expressed increased worry about inflation, particularly due to expensive oil prices stemming from the war in Iran. Forecasts for inflation in the coming 12 months rose to 4.8%, and longer-term expectations increased to 3.9%. Oil prices themselves experienced continued volatility throughout the week, influenced by uncertainty surrounding potential U.S.-Iran negotiations and the status of the Strait of Hormuz.
Analysts at BNP Paribas expressed skepticism about the effectiveness of the Treasury's buyback program, suggesting it may not be sufficient to counteract a perceived loss in Federal Reserve credibility regarding its commitment to controlling inflation.