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Rising retailers pushed U.S. stock indexes further into record territory on Friday, and the Standard & Poor’s 500 index was on pace to close out its seventh week of gains in the last eight.
Interest rates also climbed, and the yield on the two-year Treasury topped 2% for the first time since the financial crisis was peaking in 2008.
KEEPING SCORE: The S&P 500 was up 9 points, or 0.4%, at 2,777 as of 10:21 a.m. Eastern time. The Dow Jones industrial average gained 146, or 0.6%, to 25,722, and the Nasdaq composite gained 11, or 0.2%, to 7,223.
RETAILERS RINGING IT UP: Kohl’s jumped to the biggest gain in the S&P 500 and was up $2.62, or 4.3% to $63.74. Macy’s, Dollar Tree and Nordstrom all climbed 2.5% or more.
A government report confirmed that the holiday shopping season was a strong one, with retail sales climbing 0.4% last month following a 0.9% surge in November.
YIELDS: Treasury yields jumped after a key measure of inflation rose more last month than economists expected.
Overall inflation slowed in December, but that was mostly due to gasoline and other items whose prices have historically been prone to quick changes. “Core” inflation, which looks at the steadier components of the Consumer Price Index, accelerated more than expected last month.
That pushed the yield on the two-year Treasury to 2.01% from 1.98% late Thursday. The yield on the 10-year Treasury note rose to 2.57% from 2.54%.
RATE EFFECT: Investors have been preparing for a gradual rise in rates, which dropped to record lows following the Great Recession and helped propel the market on its record run. The worry is that a surprise turn higher in inflation could force central banks to move more quickly on rates than the market is expecting, which could upset the calm ride investors have been enjoying.
Stocks that pay big dividends also get hurt when bonds are paying higher interest rates, because they can lure away investors seeking income.
DISLIKE: Facebook fell to one of the largest losses in the S&P 500 after the social-media giant said that it is revamping its system to show fewer posts from brands and fewer videos in favor of more posts from friends and family. The changes may result in people spending less time on Facebook.
Facebook dropped $7.71, or 4.1%, to $180.00.
EARNINGS SEASON UNDERWAY: The floodgates are opening for companies to report their results for the last three months of 2017, and expectations are generally high. Analysts are forecasting S&P 500 companies will report earnings per share that are 10.7% higher than a year earlier, according to S&P Global Market Intelligence.
Financial companies are some of the earliest to report, and BlackRock jumped $13.05, or 2.4%, to $550.97 after it reported stronger earnings than analysts expected.
CURRENCIES: The euro touched its highest level since 2014 against the dollar amid hopes for a new coalition government in Germany and signs that the European Central Bank is preparing to rein in its stimulus sooner than many had been predicting.
The euro jumped to $1.2144 from $1.2036 late Thursday. The British pound rose to $1.3675 from $1.3536, and the dollar rose to 111.41 Japanese yen from 111.09 yen.
MARKETS ABROAD: Japan’s Nikkei 225 index lost 0.2%, South Korea’s Kospi advanced 0.3% and Hong Kong’s Hang Seng jumped 0.9%.
France’s CAC 40 gained 0.3%, the FTSE 100 in London rose 0.2% and Germany’s DAX was close to flat.
COMMODITIES: Benchmark U.S. crude slipped 21 cents to $63.58 per barrel. Brent crude, the international standard, lost 2 cents to $69.23 per barrel.
Gold rose $4.70 to $1,327.20 per ounce, silver added 12 cents to $17.09 per ounce and copper was close to flat at $3.23 per pound.