U.S. stocks climbed to fresh records even as the University of Michigan’s consumer sentiment gauge sank to its lowest reading on record, creating a sharp split between markets and households.
AI enthusiasm is helping drive expectations for stronger corporate earnings, the report says, while consumers remain downbeat about broader social effects, rising energy use and early layoffs.
Inflation is the other pressure point: recent consumer and wholesale price data have cast doubt on the one or two Federal Reserve rate cuts many investors had expected this year.
Energy costs could keep inflation uncomfortably high through the summer, pushing bond yields up and leaving bonds weaker, though still useful for income and portfolio diversification.
The setup echoes 1999’s tech boom in chip stocks, but with a key difference: then both stocks and sentiment were euphoric; now market highs are colliding with record-low confidence.
Why is Wall Street celebrating an AI boom while Main Street faces record pessimism and rising costs?
Is the AI stock boom a new economic reality or just a repeat of the 1999 dot-com crash?
Could AI's massive energy demand derail inflation targets and force the Fed to keep interest rates high?