But you wouldn’t know it from the stock market. On Wednesday, the Standard & Poor’s 500 index and Nasdaq each notched another record high, fueled by optimism about big tech companies, prospects for artificial intelligence, and generally strong corporate earnings.

Meanwhile, interest rates are rising on inflation fears. The yield on 10-year Treasuries, the benchmark for mortgage rates, reached 4.46 percent on Wednesday, the highest since July.

Why it matters: Stocks typically struggle when interest rates move higher over a sustained period, reducing the present value of future corporate earnings.

As inflation heats up — the Consumer Price Index rose in April at its fastest annual clip in nearly two years, mostly on soaring oil costs — fixed-income investors are increasingly concerned the Federal Reserve will not cut interest rates any time soon, or perhaps even hike them.

Which leads to this question: Are stock investors overly exuberant?

One expert’s view: Last week, as stocks continued their rapid recovery from a March sell-off sparked by the Iran war, I reached out to David Kelly, chief global strategist for J.P. Morgan Asset Management. Kelly, who is based in Boston, explained why the market has done so well despite economic and political turmoil.

The K-shaped economy — the rich getting richer while the rest of us muddle along — has driven wealthy investors to pour money into stocks, he said. Retirement investors dutifully put a slice of their wages into the market via their 401(k), 403(b), and IRA plans. And after decades of strong returns, investors are reluctant to cash out and get hit by capital gains taxes.

“It’s easy to get into the market, but it’s harder to get out,” Kelly said.

The numbers: From 1978 through 2025, the S&P 500 posted an annual average return of nearly 15 percent including dividends. The real return, or gains adjusted for inflation, was just shy of 11 percent.

This year, the index has already returned 9.2 percent, compared with less than 1 percent during the same period in 2025.

Beyond the tech boom, one factor behind the market’s longer-term march higher is more money chasing fewer stocks, Kelly said.According to the Center for Research in Security Prices, the number of US-traded stocks has fallen by half since late 1997 to 3,620 at the end of 2025.

Reasons for the drop include acquisitions, more companies choosing to remain private longer, fewer initial public offerings, and increasing regulatory costs.

More recently, another factor at work is a surge in stock buybacks. Kelly, citing data from J.P. Morgan’s investment bank, said the value of share repurchases was up 38 percent in 2025 through August from a year earlier. Buybacks reduce the number of shares on the market — typically increasing the value of those that remain.

Sector returns: Investors have pushed up prices across most sectors in the S&P 500.

Among the outperformers are energy stocks, which have rallied 28 percent this year. That’s no surprise given that the benchmark price for US crude has soared 76 percent.

Information technology stocks have gained nearly 17 percent, with chipmakers leading the way on sky-high surging demand for processors used to train and run AI models and the proliferation of data centers.

Laggards include health care stocks, which have retreated 5.4 percent on Trump’s efforts to lower drug prices, rising costs, and uncertainty over Medicare Advantage reimbursement.

Financials have shed 7 percent amid growing worries over private credit loans, the Trump administration’s talk about capping credit card rates, and the possibility that the Fed might have to raise interest rates.

Final thought: Since 1945, bear markets have arrived roughly every five years. The last one ended in October 2022.

The structural changes to the market laid out by Kelly have made this bull run remarkably resilient. But reversals are inevitavble.

Kelly, who has been in the business for more than 35 years, warned that if wealth inequality continues to worsen, it could spark a populist movement that would raise taxes on the rich. This could dampen flows into the market.

“How extreme does the K-shaped economy have to get before it causes a revolution?” he said.

It’s a question you don’t often hear on Wall Street.

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Larry Edelman can be reached at larry.edelman@globe.com.