S&P 500 hits record as gas prices rise and sentiment sinks

Wall Street kept bidding up the S&P 500 even as American households faced a harsher reality at the pump and in their monthly budgets. The index closed at 7,519.12 and logged nine record highs in May, a run that underscored how far markets have drifted from the mood in living rooms and grocery aisles.

Goldman Sachs added to the momentum by lifting its year-end 2026 target for the S&P 500 to 8,000 from 7,600, citing stronger earnings expectations after an exceptionally strong first-quarter reporting season. The bank also raised its earnings forecast for S&P 500 companies to $340 a share for 2026. Goldman said the index had risen 10% so far this year while forward earnings estimates had climbed 15%, helping push the market’s forward price-to-earnings multiple down from 23 at the end of 2025 to 21 even as the benchmark set records.

The rally has rested heavily on a narrow but powerful mix of forces: optimism around artificial intelligence spending, solid corporate results and a belief that the Iran conflict will not permanently damage global growth. Investors have been betting that any disruption to energy flows will be temporary and that the Strait of Hormuz will fully reopen. Goldman said beneficiaries of AI infrastructure investment should account for roughly half of S&P 500 earnings-per-share growth this year, a reminder that the market’s strength has been concentrated in a few dominant technology names.

The macro backdrop, however, told a far less reassuring story. The University of Michigan’s final May consumer sentiment reading fell to 44.8, a record low for the seven-decade survey, down from 49.8 in April and below the preliminary May reading of 48.2. One-year inflation expectations rose to 6.6% from 6.5% in April, while long-run expectations climbed to 3.9% from 3.5%. The jump in gasoline has been especially visible: the national average retail price has climbed more than 50% since the Iran war began, to about $4.552 a gallon.

That gap between market exuberance and household anxiety has become the defining feature of the moment. Stocks are pricing in resilient profits and manageable geopolitical damage; consumers are confronting higher fuel costs, worse inflation fears and the weakest confidence reading in the survey’s history. For now, Wall Street is treating the shock as temporary. The question is how long that confidence can survive if gas stays high and sentiment keeps falling.