The Great Divorce: Why Wall Street Doesn’t Care About Your Gas Bill

SAS Financial Advisors LLC |

 

Main Street is cratering. Wall Street is celebrating. Go figure.

We are sitting in the middle of a global stalemate, gas prices are exploding, and the average American feels like they are underwater. According to the latest data, consumer sentiment did not just drop, it fell off a cliff. We are at a historic low of 47.6. That is lower than the Great Recession. Lower than the 2022 inflation peak.

But look at the tickers, and you would think it was 1999. The "Big 7" just blew the doors off earnings expectations, and the market is marching higher like nothing is wrong.

How? It is simple: The Great Divorce. Wall Street has officially separated from the reality of the 90% of Americans struggling with affordability.

The top 10% are still spending, fueled by a "wealth effect" from their portfolios and home equity. Add in years of corporate tax cuts and aggressive stock buybacks that keep shares scarce, and you have a market that is fundamentally divorced from the person paying $5.00 a gallon at the pump.

Supply and demand. It is that simple, and that frustrating.

3 Key Points

Sentiment Hits the Floor

Consumer sentiment plummeted to a record low of 47.6 this month as gas prices spiked $1.00/gallon in some regions. While the 90% are hurting, seasoned investors are watching closely. Historically, when things feel this cratered, the market may have already priced in much of the bad news. That does not mean stocks cannot go lower, but it does mean sentiment alone is rarely a reason to abandon a long-term plan.

The "Big 7" and the Wealth Effect

Despite widespread AI skepticism and global chaos, the Big 7 — Amazon, Nvidia, Meta, Google, Netflix, Microsoft, and Apple — continue to crush earnings. The top 10% of Americans are still spending, protected by rising asset values and home equity. That spending helps insulate the equity markets from the Main Street crisis.

Financial Engineering vs. Reality

Wall Street’s resilience is being supported by more than just profits. Corporate stock buybacks are shrinking the supply of available shares, while lower corporate tax rates over the last several years have provided a significant cushion. The result is a market that can look healthy even while the average consumer feels like they are losing ground.

Deep Dive of the Week

If you want to see how these companies are squeezing out record margins while the rest of the world holds its breath, read the latest DealBook report:

Read the DealBook report on corporate profits 

Related SAS Perspectives

For more on how uncertainty, inflation pressure, consumer sentiment, and market behavior connect, read:

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