Gains for retailers pushed major U.S. stock indices to close higher on Friday, as the Standard & Poor's 500 stock index logged its seventh week of gains in the last eight.
Interest rates also climbed after a key component of inflation accelerated last month. The yield on the two-year Treasury reached its highest level since 2008, when the financial crisis was peaking.
The S&P 500 closed up 18 points, or 0.7 percent, at 2,786, an new high. The Dow Jones industrial average gained 228, or 0.9 percent, to 25,803, also a record, and the Nasdaq composite gained 49.28, or 0.7 percent, to close at 7,261.
Kohl's (KSS) jscored one of the biggest gains in the S&P 500 and closed up $2.75, or 4.5 percent, to $63.87 a share. Nordstrom (JWN), Target (TGT) and Dollar Tree (DLTR) all climbed more than 3 percent.
A government report confirmed that, with retail sales rising 0.4 percent last month following a 0.9 percent surge in November. The numbers fit with what individual retailers have said recently, and several have raised their profit forecasts as a result.
The strong job market has led to higher optimism among shoppers, and they're opening up their wallets even wider as a result.
Investors have been preparing for a gradual rise in interest rates, which dropped to unprecedented lows following the Great Recession. The worry is that a surprise spike in inflation would force central banks to move more quickly on rates and upset both stock and bond markets.
Stocks that pay big dividends also get hurt when bonds are paying higher interest rates, because they can lure away investors seeking income.
Real-estate stocks (VNQ), which are big dividend payers, fell 0.8 percent for the worst performance among the 11 sectors that make up the S&P 500. Utilities were also weaker.
The floodgates are now opening for companies to report their results for the last three months of 2017, and expectations are generally high. Analysts are forecasting S&P 500 companies will report earnings per share that are 10.7 percent higher than a year earlier, according to S&P Global Market Intelligence.
Financial companies are some of the earliest to report, and BlackRock (BLK) jumped $17.61, or 3.3 percent, to $555.53 after it reported stronger earnings than analysts expected.
Besides healthy growth, investors are also waiting to hear how companies say they will use the boost in profits they'll get from the tax system's overhaul.
One notable laggard was Facebook (FB), which fell to one of the largest losses in the S&P 500 after the social-media giant said that it is revamping its system to show fewer posts from brands and fewer videos in favor of more posts from friends and family. The changes may result in people spending less time on Facebook, and .
Facebook dropped $8.40, or 4.5 percent, to close at $179.37.