The S&P 500 rose 0.4% on Friday to close at 7,473.47, pulling within sight of its all-time high set earlier in the month, while the Dow Jones Industrial Average added 294 points, or 0.6%, to 50,579.70. The Nasdaq composite gained 0.2% to finish at 26,343.97, another record, capping a week in which global markets shrugged off mounting evidence that American households are growing increasingly distressed by higher prices.

The University of Michigan’s preliminary May survey of consumers delivered the bleakest reading since the series began. Sentiment fell to a record low, sinking below the trough reached in 2022 when U.S. inflation peaked above 9%, according to the survey. The decline was concentrated among lower-income consumers, who are least able to absorb higher costs for essentials, and among Republicans, the survey indicated.

Households’ one-year-ahead inflation expectations rose to 4.8% in May, up from 4.7% the previous month, while longer-term expectations jumped to 3.9% from 3.5% in April. Such rising expectations, which economists view as a potential trigger for a self-reinforcing inflation spiral, have been fueled largely by expensive oil tied to the war with Iran.

Brent crude for August delivery added 0.7% on Friday to settle at $100.21 a barrel, after erasing an earlier decline. Prices have swung sharply in recent weeks on uncertainty over whether the United States and Iran can reach a deal to reopen the Strait of Hormuz, the Persian Gulf chokepoint whose closure has blocked oil tankers from delivering crude to global markets.

The anxiety about stubbornly high inflation has pushed bond yields up worldwide, threatening to slow economies and undercut the valuations of stocks and other assets. The yield on the 10-year U.S. Treasury note edged down to 4.56% on Friday from 4.57% late Thursday but remains far above its pre-war level of 3.97%. High yields have already driven the average long-term U.S. mortgage rate to its most expensive since last summer, and they could curtail the corporate borrowing that has helped finance the buildout of artificial-intelligence data centers supporting U.S. growth.

Investors have all but abandoned bets that the Federal Reserve will resume cutting interest rates later this year. Lower rates would give the economy a boost but could worsen inflation. The effective federal funds rate stood at 3.64% in April, according to the Fed.

Federal Reserve Governor Christopher Waller said in a speech Friday that “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 added that such a move is not warranted now. Instead, he said, “it is time to simply sit and watch how the conflict and the data evolve.”

The stream of strong corporate earnings helped keep buyers in the market. Ross Stores jumped 8.1% after the off-price retailer reported quarterly profit and revenue that easily cleared analysts’ expectations. CEO Jim Conroy said the chain saw strong customer traffic during the period and may have benefited from households spending their tax refunds. Estée Lauder surged 11.9% after disclosing it was no longer considering a possible merger with the Spanish fragrance and beauty company Puig. Workday rose 5.2% and Zoom Communications gained 9.2% after both companies delivered better-than-expected profit reports.

Overseas, Japan’s Nikkei 225 climbed 2.7% to another record after a government report showed inflation in April slowed to a four-year low of 1.4%, despite higher oil and gas costs linked to the war. Indexes across Europe and Asia also rose.