Markets In Focus: The Week That Was and What’s On Tap
THE WEEK THAT WAS
Equities posted their third consecutive weekly advance through August 14th, with the S&P 500 gaining 0.4% to close at 7,785.76 and briefly touching record territory above 7,800 intraday on Thursday. The Nasdaq Composite added 0.1% for the week, eking out its own third straight gain, while the Dow Jones Industrial Average slipped 0.6%, snapping a two-week winning streak on weakness in healthcare and industrials. The week’s standout was the Russell 2000, which surged 3.15% to fresh highs, a notable data point suggesting the rally may be broadening beyond the mega-cap growth names that carried the first half. The VIX finished near multi-month lows around 14.85, underscoring the low-volatility, melt-up character of the tape.
The week’s marquee events were Wednesday’s CPI print and Thursday’s PPI release, and by most measures the data cooperated. Headline CPI rose just 0.1% in July on a monthly basis, with the year-over-year rate holding at 3.4%. Core eased modestly to 2.5%. Both reads landed essentially in line with consensus, which was enough to prevent a hawkish repricing, but not enough to declare victory. Inflation is stabilizing, not retreating, and at nearly 170 basis points above the Fed’s target, the policy math remains uncomfortable. The Treasury market told a nuanced story: the short end rallied slightly in relief, while the belly and long end widened, suggesting term premium concerns are alive even when the near-term data cooperates.
Against that backdrop, Jackson Hole starts late next week. Chair Warsh’s August 27th address has become the single most-watched event on the calendar, and for good reason — he has offered almost no forward guidance since taking the helm in May, and when asked directly about his approach to the speech, he described it as “a blank piece of paper.” The Fed held rates steady at 3.50%–3.75% in July on a 9-3 vote, with three dissenters favoring an immediate hike. Markets are now pricing roughly a 65% chance of no September move following the benign inflation data, though J.P. Morgan and others have shifted their base case to a 25-basis-point hike if energy prices remain elevated and inflation expectations show any sign of drifting. Warsh’s Jackson Hole tone will go a long way toward settling the debate.
Earnings overall have been quite strong, to say the least. With 455 of 500 S&P 500 companies now reported, 87% have beaten EPS estimates against a historical average closer to 67%, and the blended year-over-year earnings growth rate for Q2 stands at approximately 50%, which would be the highest on record for the index. The headline number warrants a footnote: a substantial portion of the outperformance traces to one-time investment gains at Alphabet and Amazon. Stripping those out, the normalized beat rate and growth figures remain impressive but more earthbound. The concentration theme persists, the ten largest index constituents now account for roughly a third of all S&P 500 profits, approximately double their mid-1990s share.
Friday delivered a note of caution. Retail sales fell 0.6% in July against expectations for a modest gain, and the preliminary University of Michigan Consumer Sentiment Index declined to 51.0 from 55.2, remaining well below its long-run average of approximately 84. Gasoline prices and weaker auto sales contributed to the headline sales decline, and some economists were quick to characterize the read as noise rather than trend. That may prove correct, but the consumer data arriving alongside oil prices that continue to press higher reinforces a scenario worth monitoring: corporate earnings holding up as household budgets quietly tighten. Part of the negative impact in the month could be due to Amazon’s Prime Days hitting in June this year, instead of July last year. Thus, we may have seen a bit of a pull-forward on those.
THE WEEK AHEAD
Markets enter a data- and earnings-dense week with retail front and center. Home Depot and TJX report Tuesday before the bell, Target and Lowe’s follow Wednesday, and Walmart closes the retail parade Thursday morning. Collectively these prints will offer the clearest read yet on consumer health amid sticky food/household inflation and lingering tariff pass-through — Target’s discretionary trends and Walmart’s margin trajectory under new CEO John Furner deserve particular attention. On the AI/tech side, Cisco Systems reports Wednesday after the close, a useful proxy for enterprise networking capex tied to data-center buildouts; investors will parse commentary for corroboration of the broader AI infrastructure demand narrative that has driven mega-cap tech leadership.
Macro-wise, Wednesday’s July FOMC minutes are the key domestic catalyst, with markets keen to gauge how seriously the committee weighed dissent for a September cut against a softening labor backdrop. July housing starts, building permits, and industrial production/capacity utilization also print Tuesday, followed by weekly jobless claims Thursday and flash S&P Global PMIs Friday. The week culminates with the Jackson Hole Economic Policy Symposium kicking off Friday (Aug 21–23) — Chair Kevin Warsh’s remarks will be scrutinized for policy-path signaling into the fall.
Geopolitically, the US-Iran conflict remains the key wildcard: the Strait of Hormuz has been effectively closed to tanker traffic since fighting resumed in July, keeping Brent near $84-85/bbl and US gasoline elevated roughly 35% year-over-year — a direct consumer-spending headwind that adds context to this week’s retail prints. Talks remain stalled, with Washington favoring economic pressure over active negotiation; any escalation is a tail risk for energy prices and freight costs.
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The S&P 500 generally represents performance of 500 large companies listed on exchanges in the U. S. It is one of the most commonly followed equity indices. The Nasdaq Composite Index is a market-weighted index that measures the performance of more than 3,000 common equities listed on the Nasdaq Composite Market. The Russell 2,000 Index is a market-cap weighted index that measures the performance of approximately 2,000 of the smallest companies in the Russell 3,000 Index. The MSCI ACWI captures Large and Mid-Cap representation across 23 Developed Markets (DM) and 24 Emerging Markets (EM) countries. With 2,921 constituents, the index covers approximately 85% of the global investable equity opportunity set. FactSet Research System is a financial data and software company that provides research for Wall Street professionals and individual investors.
