Neil SethiAug 14, 2026

Markets Update - 8/14/26

A look at what happened today impacting US equity, Treasury, and selected commodity markets, and what to watch for next week

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Quick Summary

US equity indices opened little changed Friday after a weaker than expected retail sales report saw an initial drop in Fed rate hike expectations which pulled down shorter maturity Treasury yields, but the long end nevertheless was edging higher a day after the highest clearing yield for a 30-year auction since 2001 (discussed in last night’s update).
That pressure from yields would continue throughout the day (and even the short end would move higher as the day progressed) pushing large caps lower. The normally more rate sensitive small cap Russell 2000 though moved against that weakness, driving higher and finishing at another all-time high.
At day’s end, the Russell 2000 gained 0.5%, while the S&P 500 fell 0.2%, the Dow Jones Industrial Average slipped 0.2%, and the Nasdaq Composite lost 0.3%.
That said, volumes were extremely low (the fourth lowest of the year as discussed in the subscriber section) and excluding Energy the spread between the best and worst performing sectors was just 1.2% meaning traders weren’t taking big bets.
Expectations for a low volatility environment were further evidenced by VIX settling at a low for the year.
The day’s economic data did little to provide excitement with July retail sales unexpectedly falling the most in over a year (ex-autos and gasoline the most since January 2025) as online sales dropped the second most from a month earlier since July 2021 lapping June’s Prime Day promotion. That led to downward revisions to Q3 GDP forecasts. August preliminary University of Michigan sentiment also missed expectations, with only 8% of consumers expecting income growth to exceed inflation over the next year.
Most of the index-level pressure came from megacap growth and parts of Technology, with semiconductors and software giving back some of Thursday’s strength. Applied Materials and Broadcom lagged in chips, while software stocks also saw profit-taking, though Sandisk and memory names remained a notable pocket of strength.
Under the surface, six S&P 500 sectors finished higher, the equal-weighted S&P 500 was flat, and in addition to the Russell 2000 the S&P MidCap 400 reached a fresh record high during the session.
For the week, the Russell 2000 led with a +1.1% gain, while the S&P 500 rose +0.4%, the Nasdaq Composite added +0.1%, and the Dow Jones Industrial Average fell -0.6%. Energy was the clear winner, with the S&P 500 Energy sector up +7.3% for its best week since October 2022, while Consumer Discretionary led to the downside.

The day’s economic data did little to provide excitement with July retail sales unexpectedly falling the most in over a year (ex-autos and gasoline the most since January 2025) as online sales dropped the second most from a month earlier since July 2021 lapping June’s Prime Day promotion. That led to downward revisions to Q3 GDP forecasts. August preliminary University of Michigan sentiment also missed expectations, with only 8% of consumers expecting income growth to exceed inflation over the next year.

Most of the index-level pressure came from megacap growth and parts of Technology, with semiconductors and software giving back some of Thursday’s strength. Applied Materials and Broadcom lagged in chips, while software stocks also saw profit- taking, though Sandisk and memory names remained a notable pocket of strength.

Under the surface, six S&P 500 sectors finished higher, the equal-weighted S&P 500 was flat, and in addition to the Russell 2000 the S&P MidCap 400 reached a fresh record high during the session.

For the week, the Russell 2000 led with a +1.1% gain, while the S&P 500 rose +0.4%, the Nasdaq Composite added +0.1%, and the Dow Jones Industrial Average fell -0.6%. Energy was the clear winner, with the S&P 500 Energy sector up +7.3% for its best week since October 2022, while Consumer Discretionary led to the downside.

US equity indices opened mixed but converged around the flat line in the first half hour. From there large caps fell, remaining in the red the rest of the session, ending down around 0.2 to 0.3%.

The RUT though pushed higher and finished up 0.5% at another all-time high.

For the week, indices struggled until the RUT lifted off Wednesday morning, leading for the week +1.1%.

The SPX & Nasdaq wouldn’t follow until Thursday although fell from Thursday morning’s high to end +0.4% & +0.1%.

The DJIA never saw any green after Tuesday ending -0.6%.

DJIA, Nasdaq, S&P 500 and Russell 2000 closing values

Market commentary

US equities

“The market is appropriately bullish right now,” Anastasia Amoroso, chief investment strategist at Partners Group, told CNBC’s “Closing Bell” in an interview, noting the strength in U.S. corporate earnings. Amoroso also noted that software has “rallied and rebounded … I think the market came to the realization that maybe we did not appropriately price in those risks.”

“Markets remain remarkably resilient and are likely to enjoy a happy end to summer. But beneath that calm, the tails are getting fatter: the risks increasingly point to higher commodity prices, stagflationary risks and higher long-end yields.” —Skylar Montgomery Koning, macro strategist.

Given the back-to-back gains on the S&P 500 following subdued inflation readings on Wednesday and Thursday, Jay Hatfield of Infrastructure Capital Advisors said Friday’s digestion is a sign of what’s to come for the rest of August and September. “Today is like the start of that post-earnings flattening out trade,” the CEO said to CNBC.

“I don’t think we will get a fully flowing Strait of Hormuz, unfortunately, in the near term,” Patrick Armstrong, chief investment officer at Plurimi Wealth, said in an interview on Bloomberg TV. “The market I do think is complacent on the risks.”

Retail sales and consumer sentiment

Friday’s data “leave the consumer looking a little less healthy,” Stephen Brown, the chief North America economist at Capital Economics, said in a note. “Nonetheless, the miss in July was mainly due to a sharp fall in non-store sales which likely reflects the different timing of Amazon Prime Day this year, rather than a fundamental downshift in consumer spending growth.”

“Unexpected weakness in consumer spending isn’t good news for the wider economy, but markets may embrace the data in the near term because it strengthens the case for avoiding rate hikes,” said Ellen Zentner, chief economic strategist for Morgan Stanley Wealth Management

“It was a troubling update on the overall health of the consumer,” said Ian Lyngen at BMO Capital Markets. “This will contribute to the case for a Fed pause next month.”

One poor month of spending doesn’t necessarily mean the economy is falling off a cliff, but it becomes harder to dismiss alongside disappointing jobs figures, according to Bret Kenwell at eToro. Combined with tame inflation data, it should ease pressure on the Fed to raise rates, he said. “Still, investors should be careful what they wish for,” Kenwell noted. “Economic weakness is a steep price to pay to avoid a quarter-point hike. For the economy to stay resilient, consumers will need to do the same.”

The economy is highly dependent on consumer spending, so a big slowdown could end up hurting corporate profits and the stock market, according to Chris Zaccarelli at Northlight Asset Management. “But in an environment where inflation can cool down and the Fed can keep rates on hold as a result of that, would be very good for this bull market,” he said.

A look at selected CNBC midday movers and Bloomberg corporate headlines, including Cisco, drone stocks, Reddit, Applied Materials, Workday, Sandisk, Tesla, SpaceX/Cursor, and Tyson Foods.

Updated daily and weekly technical charts across the SPX, Nasdaq, Russell 2000, and equal-weighted SPX.

A review of market breadth and participation, including large individual winners and losers, low SPY volume and Nasdaq speculative activity.

A look at the rates and Fed backdrop, including Treasury yields, updated Fed hike expectations, long-end yield pressure, and BoA/Hartnett on Treasury supply and debt-service risk.

A look at volatility and market structure, including drops in the VIX, VVIX, and 1-day VIX.

A review of cross-asset trends, including WTI crude, the dollar, gold, copper, natural gas, and bitcoin.

An update on Q3 GDP tracking and the post-retail-sales revisions from the Atlanta Fed and Goldman, along with the July PCE inflation setup after CPI and PPI.

A look at consumer and earnings-related posts, including BoA on card-spending dynamics, BoA on earnings-growth regimes, and the FT/Christophe Barraud on hyperscaler debt issuance and credit-market capacity.

A wrap-up on the market setup, low-volume consolidation, long- end yields, and the quieter near-term calendar.

A look ahead to next week’s calendar, including US economic data, FOMC minutes, Treasury auctions, and SPX earnings.

economic posts.

Stock and sector breakdown

SPX sector breadth eased for a second session to 6 of 11 sectors higher, although now just one over 1% and not a big influence in Energy. In contrast Tech (which is nearly 40% of market cap) fell from 1% to -0.4%. Outside of Energy the spread was narrow though with all the sectors closing between +0.6% and -0.6%.

Stock and sector breakdown

Most of the pressure at the index level came from growth stocks. The Vanguard Mega Cap Growth ETF fell 0.5%, while the information technology sector (-0.4%) was among the laggards as some of yesterday’s strongest areas gave back ground. The PHLX Semiconductor Index slipped 0.3%, with Applied Materials (AMAT 507.18, -27.36, -5.12%) facing some profit-taking following a solid earnings report and Broadcom (AVGO 392.99, -24.83, -5.94%) also among the large-cap chip laggards. Continued strength in memory stocks helped offset some of that weakness, as Sandisk (SNDK 1641.11, +113.00, +7.39%) extended its rally following yesterday’s investor day after JPMorgan resumed coverage with an Overweight rating and a $2,250 price target.

Software stocks saw more pronounced profit-taking following yesterday afternoon’s rally, leaving the iShares GS Software ETF (IGV) down 2.1%. Workday (WDAY 198.68, -7.77, -3.76%) also gave back some of yesterday’s roughly 18% surge that followed reports that Silver Lake is in talks to acquire the company.

The consumer discretionary sector (-0.4%) also lagged amid weakness in mega-cap stocks and retail names ahead of a busy slate of earnings from the group next week.

Energy (+1.4%) was the clear sector leader as crude oil resumed its climb despite little new geopolitical news. The utilities (+0.6%) and materials (+0.5%) sectors also outperformed, with higher precious metals prices supporting the latter.

[Note: % changes above may differ from chart as chart uses futures.] Energy the clear winner this week, but we did see 8 of 11 sectors higher (and 7 outperformed the SPX). Consumer Discretionary (-1.9%) led to the downside. Comm Services and Materials also finished lower.

[Note: % changes above may differ from chart as chart uses futures.]

Energy the clear winner this week, but we did see 8 of 11 sectors higher (and 7 outperformed the SPX). Consumer Discretionary (-1.9%) led to the downside. Comm Services and Materials also finished lower.

$SPY volume fell further to just 29.9M shares traded Friday. It was only lower three days this year (all in February).

With respect to the narrow spread of sectors, the number of large SPX winners (up over 3%) dropped to 18 from ~60 Thursday, ~40 Wednesday, ~20 Tuesday, and large losers (down over 3%) remained low at 18. They were 11, 17 and 14 the prior three days.

[chart from finviz.com]

Speculation on the Nasdaq dropped back as I guess even the “degens” (per BBG’s Eric Balchunas) head out early with just four stocks over 100M shares traded around the lows of the year.

After-hours movers

None today, but here were the mid-day movers:

Cisco Systems – Shares slid 2% after HSBC cut its rating on the networking equipment maker and cut its price target to $120 from $137. “We downgrade our rating to Hold (from Buy previously) as we see better value elsewhere,” wrote analyst Abhishek Shukla. “As we see growth sequentially decelerating from 2QFY27e onwards, we believe the valuation multiple could come under pressure.”

Drone stocks – Manufacturers of unmanned aircraft saw shares rise Friday after President Trump imposed import tariffs on foreign-made drones and parts. Unusual Machines gained 24%. Donald Trump Jr., the president’s son, joined the advisory board of Unusual Machines in 2024. Red Cat surged 8%, and AeroVironment jumped 2%.

Intuitive Machines — The maker of robotic spacecraft and landers designed to fly to the moon jumped 10%. Houston-based Intuitive said its order backlog expanded to $1.55 billion as of June 30 from Dec. 31, and Stifel Financial raised its investment rating to buy from hold with a $26 price target, FactSet’s StreetAccount service said.

Fox Corporation – The media stock jumped 5% following upgrades to overweight from JPMorgan and Wells Fargo. JPMorgan’s David Karnovsky pointed to Fox’s agreement to acquire Roku as one of the drivers. “On a strategic and revenue synergy basis, we see substantial runway for Fox to apply its advertising scale and expertise to Roku’s broad household reach,” he wrote.

York Space Systems — The maker of mini-satellites for the military and the government slumped 12%. York second-quarter earnings per share missed analyst estimates, and the Denver-based company lowered full- year guidance, FactSet data showed. York blamed “the removal of the new business revenue in 2026 given the shift in government acquisition methodologies.”

Reddit — The social media platform surged 12% after S&P Dow Jones Indices said Reddit would join the S&P 500, starting Aug. 18. Reddit will replace AvalonBay Communities, which is merging with Equity Residential.

Applied Materials — Shares lost 5% after the semiconductor manufacturing equipment maker posted Q2 results that failed to impress investors. The company earned an adjusted $3.50 per share on revenue of $9.12 billion. Sales in its semiconductor systems division totaled $7.04 billion, only slightly above a FactSet consensus of $6.96 billion.

Wayfair — The online furniture retailer gained 1% after Bernstein upgraded its rating to outperform from market perform. “In a furniture market that is not growing, Wayfair is putting up [high single-digit] revenue growth in the US,” analysts at the firm wrote.

Workday — Shares were last down more than 3% as traders pocketed gains. Workday rallied nearly 18% on Thursday — its best session in 10 years — after Reuters reported that private equity firm Silver Lake was in talks to buy the company.

Sandisk — The memory name climbed 6% after an analyst at JPMorgan upgraded Sandisk to overweight from neutral. “Sandisk’s ‘New Business Model’ long-term agreements have structurally reset its margin profile higher and materially reduced cyclicality by converting the majority of its business into long-dated, high-margin, take-or-pay-style revenue,” the analyst said.

Other corporate news

The Trump administration is imposing tariffs of as much as 100% on imported drones and their components, escalating efforts to reduce US reliance on foreign suppliers.

Tesla Inc. is planning to unveil a new roadster design with “flying” capabilities as soon as this month, the Information reported.

SpaceX has completed a $60 billion acquisition of startup Cursor, a key part of Elon Musk’s bid to gain ground on rivals Anthropic PBC and OpenAI.

Applied Materials Inc. gave a solid forecast that still underwhelmed investors, a sign of the lofty hopes surrounding a company that’s key to the AI boom.

Reddit Inc. will join the S&P 500 next week as part of an off-cycle change. It replaces AvalonBay Communities Inc.

Tyson Foods Inc. is closing more beef plants as a prolonged cattle shortage continues to force the US beefpacking industry’s restructuring.

Note on all charts the colored lines are moving averages (the average price over the lookback period (days on the daily charts, weeks on the weekly charts)): 20 = green 50 = purple 100 = blue 200 = brown

Note on all charts the colored lines are moving averages (the average price over the lookback period (days on the daily charts, weeks on the weekly charts)): 20 = green, 50 = purple, 100 = blue, 200 = brown. Exception is monthly charts where blue is 10-month moving average and brown is 20-month moving average.

MACD = Moving average convergence/divergence line, a measure of momentum that compares longer term and shorter term momentum to gauge if a move is strengthening or weakening. This is probably my favorite individual indicator (it’s also the favorite of Katie Stockton, a very fine technician).

RSI = Relative Strength Index (basically what it sounds like) = measures the strength of the move comparing gains to losses over the given lookback window (I use the standard 14 periods).

Turning to the charts, the SPX ended just below its all-time high.

Nasdaq similar to the SPX except not yet at an all-time high (just over 1% below, so a test seems likely).

The Russell 2000 (RUT) though did make a new all-time high.

While the equal-weighted SPX missed by the slimmest of margins (-0.01%). Technicals remain strongest here, but the RUT is catching up.

Weekly charts all continue to look solid except perhaps some quibbles on the Nasdaq chart which hasn’t seen its weekly technicals confirm the move in price. The SPX equal-weight the best of the bunch here as well:

Exception is monthly charts where blue is 10-month moving average and brown is 20-month moving average.

RSI = Relative Strength Index (basically what it sounds like) = measures the strength of the move comparing gains to losses over the given lookback window (I use the standard 14 periods).

Turning to the charts, the SPX ended just below its all-time high.

Nasdaq similar to the SPX except not yet at an all-time high (just over 1% below, so a test seems likely).

The Russell 2000 (RUT) though did make a new all-time high.

While the equal-weighted SPX missed by the slimmest of margins (-0.01%). Technicals remain strongest here, but the RUT is catching up.

Yields rose across the curve Friday despite the weak retail sales print and UMich consumer sentiment:

Two-year Treasury yields recovered from early losses to finish at 4.17%, just off Thursday’s 1-month low. They were down though for a third week (weekly chart below), 26 basis points from the peak close July 23rd, which was the highest since February of last year.

They are ~51 basis points above the Effective Fed Funds rate (red line), continuing to call for rate hikes.

Yields rose across the curve Friday despite the weak retail sales print and UMich consumer sentiment

They are ~51 basis points above the Effective Fed Funds rate (red line), continuing to call for rate hikes.

In that regard, Fed rate hike bets round-tripped most of their softening although still finished a touch lower than Thursday, and well below levels from a week ago. According to the CME Fedwatch tool, September ended the week at 32.5% priced, October 47%, December 67%. Peak remains next June at 83% chance of one hike, 47% chance of two.

10-year yields up to 4.69% ending the week up four basis points.

30-year yields also moved up to just below the highest level since 2007 at 5.26%, +6 basis points on the week.

Equal-weighted S&P 500 weekly technical chart

10-year yields up to 4.69% ending the week up four basis points.

30-year yields also moved up to just below the highest level since 2007 at 5.26%, +6 basis points on the week.

BofA’s Hartnett: “US national debt set to surpass $40T in coming days. 4.7% cost of servicing debt $1.4T in past 12 months, will keep rising until 5-year UST yields drop below 3.25%.”

Stocks storming to new highs same day government selling 30-year US’s at highest yield (5.126%) in 25 years “tracks” as the kids say (Chart).

VIX fell to 14.3, the lowest since December.

The indicator remains at the bottom of its “normal” range post-GFC, consistent with ~0.90% average daily moves in the SPX over the next 30 days.

U.S. 30-year yield versus other sovereigns

The VVIX (VIX of the VIX) close but not yet breaking to new lows for the year at 87.5.

VIX fell to 14.3, the lowest since December.

The indicator remains at the bottom of its “normal” range post-GFC, consistent with ~0.90% average daily moves in the SPX over the next 30 days.

The VVIX (VIX of the VIX) close but not yet breaking to new lows for the year at 87.5.

The current level is consistent with “moderate” daily moves in the VIX over the next 30 days (historically, normal is 80-100, but we’ve been above 90 most of the time since July ’24). Above 100 is the level flagged by Charlie McElligott as indicating higher stress.

And the 1-day VIX eased to 9.2, one of the lowest closes of the year and the lowest Friday close since the first week of the year consistent with a move of just 0.58% in the SPX next session.

The current level is consistent with “moderate” daily moves in the VIX over the next 30 days (historically, normal is 80-100, but we’ve been above 90 most of the time since July ‘24). Above 100 is the level flagged by Charlie McElligott as indicating higher stress.

U.S. 30-year yield versus historical range

And the 1-day VIX eased to 9.2, one of the lowest closes of the year and the lowest Friday close since the first week of the year consistent with a move of just 0.58% in the SPX next session.

WTI edged up 1.3% remaining in the middle of its range over the past month.

The DXY dollar index (which is fixed weighted with a heavy (57%) weighting vs the euro) fell back towards the 2-month lows from last week, not rebounding with yields.

The daily MACD as noted three weeks ago flipped to quite negative while the RSI was under 40 (now back over). As I said then, “clearly consolidating, but too early to call it a downtrend. But if it resumes its decline, that might be enough for me.” Still remains to be determined.

Gold futures (/GC) up but didn’t get to the key 200-DMA after three failed tests earlier this week. As noted last Thursday “still has a good technical setup with positive daily MACD and RSI.”

US copper futures (/HG) little changed around one-week lows. It continues to have “supportive technicals,” although they’re very close now to flipping more neutral.

US natural gas futures (/NG) little changed. The daily MACD as mentioned Monday has flipped to more bullish but the RSI remains below 50. Also has layers and layers of resistance above.

Bitcoin futures continue to trade in their range over the past month+ (although at a 1-month low Friday), also at the same levels they were at in early June. As I mentioned over a month ago, “the daily technicals continue to look better than the price action, so maybe there’s a chance?” That never translated into more than a modest move higher, and now they have turned more negative. I would though still probably be a buyer if they saw a strong move above $67,500.

WTI edged up 1.3% remaining in the middle of its range over the past month.

The DXY dollar index (which is fixed weighted with a heavy (57%) weighting vs the euro) fell back towards the 2-month lows from last week, not rebounding with yields.

Gold futures (/GC) up but didn’t get to the key 200-DMA after three failed tests earlier this week. As noted last Thursday “still has a good technical setup with positive daily MACD and RSI.”

US copper futures (/HG) little changed around one-week lows. It continues to have “supportive technicals,” although they’re very close now to flipping more neutral.

US natural gas futures (/NG) little changed. The daily MACD as mentioned Monday has flipped to more bullish but the RSI remains below 50. Also has layers and layers of resistance above.

Misc

The Atlanta Fed’s Q3 real GDP tracker fell to +4.31% as of August 14th, down from +5.83% on August 6th, with the bulk of the decline driven by a pullback in the contribution from consumption (to +1.71% from +2.81%), but also business spending (-0.25%) and inventories (-0.17%).

This is consistent with my caveat that both Q1 and Q2 started very strong before falling sharply as we approached those actual GDP reads.

The reading remains above the blue chip consensus* of ~+2.2%, but that has been rising while the Atlanta Fed measure has been calling.

Here’s the breakdown of the components as of August 14th and changes from my last update August 6th:

Inventories = +1.75% (-0.17%)

Consumption = +1.71% (-1.10%)

Nonresidential fixed investment (biz spending) = +0.79% (-0.25%)

Gov’t = +0.19% (+0.01%)

Residential investment = +0.04% (-0.04%)

Net exports = -0.17% (+0.03%)

GDPNow Forecast: +4.31% (-1.52%)

Real Retail Control Group quarterly change

Following the retail sales report Goldman’s Q3 GDP tracking estimate up to +2.2% (quarter over annualized) but the Dollar Index Leader: Consumer 2nd Quarter Annualized % change.”

Lower-income spending growth has overtaken higher-income

One interesting note ahead of the retail sales release is BofA noted that “the latest BAC card data provide additional evidence that K-shaped dynamics are waning.

“In each of the four weeks ending Aug 1, y/y total BAC card spending growth was stronger among lower- than higher-income HHs (chart).”

“And this isn’t just due to higher gas prices. Even in discretionary categories, the ‘K’ has turned into a ‘C’ over the last couple of months, with lower-income spending broke solid, while higher income spending has cooled modestly.”

Spreads have widened in the highest-quality Canadian credit market

Included in @C_Barraud’s Friday Brief are his thoughts on an FT piece regarding hyperscaler debt issuance distorting global bond markets as spreads are pushed higher, not necessarily out of fear of default, but instead out of limited capacity to absorb the huge sums.

A number of top credit managers on @bsurveillance have noted this impact in the US who note that it is availability of debt capital, not its cost, which will be the limiting factor in hyperscaler issuance. But as that availability starts to hit limits in the US, “they are tapping liquidity everywhere.”

For example, Alphabet raised C$8.5bn ($6.1bn) earlier this year, briefly the biggest ever bond issuance in the Canadian market before Amazon issued C$14bn a few weeks later. From zero presence until this year, Amazon and Alphabet together now make up 7.7 per cent of the entire Swiss investment-grade credit index, S&P data shows

“When [Alphabet and] Amazon suddenly brings billions of debt into a relatively small market, local investors have to make choices. They buy Amazon instead of another issuer, sell other bonds, or demand higher yields. In Canada, the huge influx of Amazon and Alphabet paper even helped push AA-rated credit spreads temporarily above A-rated spreads.” (chart)

“[The hyperscalers] basically come in and reprice all of the high-quality curve,” said Souheir Asba, a credit portfolio manager at AllianceBernstein, about smaller debt markets in general. “You’re resetting valuations wider for other, similarly rated companies,” she said.

“We wouldn’t want to be in longer-end euro investment-grade credit at the moment, because we know the hyperscalers are going to have to fund in every currency they can,” Steve Caprio, head of European and US credit strategy at Deutsche Bank said.

More broadly, Christophe notes, “AI risk is increasingly spreading across the entire financial system.... If the economic returns on all this investment eventually disappoint, the risk will probably not remain confined to tech stocks and could spread into credit, data centers, private credit, utilities and infrastructure.”

Wrap-up

As I wrote Sunday:

So will the now “on again” AI trade continue? The evidence is there, with momentum building, expected earnings continuing to ratchet higher, and positioning not yet “extreme” according to DB.

And the overall setup remains favorable as well, with systematics biased to buy according to BofA, discretionary and hedge fund positioning light according to DB and Goldman, buybacks almost back to full strength, retail re-engaging, the economy remaining resilient even if pay growth continues to ease — something we’ll need to keep an eye on — and earnings growth spectacular.

Sentiment is not really a tailwind but not yet a headwind — “it takes bulls to have a bull market” — seasonality is not great, and rates are pushing up toward levels that may cause some indigestion, but none of those are yet at levels that I would consider “red flags.”

And as discussed at the top, it appears from the most recent indications that President Trump has no appetite for dialing things up militarily at this point, which means it’s likely things will drag on with little change through the midterms unless or until Iran decides it wants to reopen the Strait.

I had said last Sunday I was becoming more constructive, and that continues into the coming week.

And as I said Monday

the good news is we certainly didn’t break down, but we also certainly didn’t extend as I thought might happen to start the week. The Iran conflict appearing to become even more never-ending, which pushed up oil prices and Treasury yields, certainly didn’t help. And perhaps traders are unwilling to step in front of Wednesday’s CPI report.

If that’s the case, we could very well get another session like today, particularly with no economic or earnings catalysts to really propel things in either direction ahead of that.

And Wednesday night

we got our “clearing event” [in CPI] this morning, and while we didn’t see quite the positive response I was expecting, we did see a gain and, perhaps more importantly, expanding breadth as the resurgence of the AI-trade didn’t suck all the oxygen out of the room. Perhaps it’s the start of a trend? It will take some time to know, but some softening in yields would be helpful.

Otherwise we start to move into a less catalyst-heavy part of the calendar (PPI is unlikely to move the needle much, although I guess retail sales could if it comes in very weak). So if earnings announcements continue to come in overall very solid (we get Applied Materials tomorrow), perhaps that, plus the other items mentioned this weekend, can continue to push us higher.

And while that call worked Thursday we took another pause Friday. It probably didn’t help anything that rates rebounded later in the day after initially falling, but as noted earlier it was a very lightly traded session and the narrow spread in sectors evidences that traders weren’t taking big bets one way or the other.

With Iran calming down and a dearth of major catalysts on the near- term horizon that might be something we see more of the next few weeks (Bank of America designed their forward looking US Economic report to cover all the way through the end of the month if that gives you an idea). Prepare to get a lot more “out of office” replies I guess.

The Week Ahead

US economic data remains on the lighter side (in terms of importance) next week with highlights July industrial production (our most wholistic look at manufacturing), housing starts/permits, import prices, and the August flash PMIs. We’ll also get July pending existing home sales and August NAHB home builder sentiment along with the normal weekly reports (ADP, unemployment claims, etc.).

In terms of Fed speakers interestingly none on the schedule, but we will get the minutes from the July meeting which will be parsed with much interest.

US Treasury auctions are light with just the lightly followed 20-year Wednesday and a 30-year TIPS reopening Thursday.

In terms of SPX Q2 earnings we’re very much in the windup phase (at least until the end of the month with Nvidia) with just 12 SPX components reporting Friday. There’s a retail focus to the over $100B reporting bunch which includes WMT, HD, AI, THX, DE, LOW (by earnings weight).