Why the Stock Market Is Up — and Under Pressure

The U.S. stock market recently hit a new record high, even as many people are worried about the economy. Big companies are earning more money than experts predicted, which is making investors happy. But the cost of borrowing money is rising, and oil prices are going up too. These pressures are making some experts ask how long stocks can keep climbing.

Analysts say the main reason stocks are doing well is strong company earnings. 'This bull market is about nothing but earnings growth,' said Michael Purves, founder of a research firm called Tallbacken Capital. More than 70 companies in the S&P 500 have raised their profit forecasts for the latest quarter, which is a record according to research firm FactSet. That kind of strong performance is giving investors confidence.

Two groups of companies are leading the way: energy firms and tech giants. Energy companies are earning more because oil prices have risen, partly because of conflicts in the Middle East. Tech companies are pulling in huge profits from the artificial intelligence boom. AI is computer technology that can learn, reason, and solve problems on its own.

But those same trends are creating problems for other businesses. High oil prices make it more expensive for many companies to run their operations. The massive spending on AI is also pushing up bond yields — the interest rates on money the U.S. government borrows. The yield on a 10-year Treasury bond recently rose above 5.3 percent, which is near its highest point in decades.

The head of the San Francisco Federal Reserve, Mary Daly, said she is worried these trends could cause inflation to rise further. Inflation means that everyday goods and services cost more money over time. If inflation goes up, the Fed may raise interest rates, which makes loans more expensive for families and businesses. That could slow down the whole economy.

The famous Chrysler Building in New York City now has a new owner. A company called Tishman Speyer is buying the historic skyscraper for $235 million. The building has lit up the Manhattan skyline since 1930 but had fallen into disrepair under its last owners. Tishman Speyer plans to modernize the elevators, polish the building's stainless steel crown, and create a rooftop clubhouse for tenants on the 61st floor.

Meanwhile, a proposed tax on California's billionaires is losing steam. Proposition 40 would place a one-time 5 percent tax on the state's wealthiest people to help fund health care. More than $200 million has been spent to fight the measure, including about $100 million from Google co-founder Sergey Brin. Recent polls show support for the tax has dropped to about 45 percent, and prediction markets give it less than a one-in-three chance of passing.