Inflation hits consumer names while tech giants lead S&P 500 gains

Consumer prices are rising 3.7% a year, with a gallon of gas costing $4.33 against $3.06 a year ago, yet the S&P 500 is up 12.3% this year. The market is split between consumer stocks that are falling and technology names that are leading gains. US oil crossed $90 a barrel on March 6, up from $60 in January, with energy prices up 20% in a year. Four forces are pushing prices up: war, immigration, taxes, and an AI spending race.

Nike is down 40% this year, with a 4% sales drop last quarter led by China, where sales fell 26%. North America sales still grew 2%. McDonald's is down 19%, all of it since oil crossed $90, though its sales are still up 4%. Home Depot is down 8%, as remodels can wait when mortgages cost 7.4%. Starbucks is up 18% this year but flat since oil crossed $90. Tesla is down 18%, but its sales rose 25% last quarter; its margin shrank to 1.4% from 4.1%. GM is up 10% since oil crossed $90.

The 10-year Treasury yield is 5.1%, just off the 24-year high of 5.3% hit on Oct 5. A 30-year mortgage costs 7.40%. Homebuilders are down 11% this year, with D.R. Horton down 5%. Capital One is down 17% this year, all of it before oil crossed $90, though card delinquencies are still edging down. Utilities are down 10% since March, as a 5% Treasury pays more than their 2.9% dividends. Constellation Energy, down 25% this year, does not fit that story; it yields 0.6% and carries little debt.

Exxon and Chevron are both up 51% this year. From Jan 3 to Oct 12, 2022, Exxon rose 60% while the S&P 500 fell 25%. Nucor is up 61%, with sales up 23%. Freeport-McMoRan is up 39%, though its sales have not caught up yet. Copper costs 39% more than a year ago. Coca-Cola is up 36%.

Tech is up 29% this year, with Nvidia up 17%, Microsoft up 11%, and Apple up 26%. The ten largest companies make up 40% of the S&P 50's value. In 2022, when inflation forced the Fed into a run of rate hikes, tech stocks fell harder than the market. Amazon, Microsoft, Alphabet and Meta spent $511 billion on capital projects in the twelve months to June 30, 2026, which is 77% of the cash their businesses generate. Core inflation is now 2.6%. If it climbs while energy stays high, the market that is still rising will catch up with the one that is already falling.