Written by Amaury de Barros Conti, Partner | Vice President Investments
WHAT MOVED MARKET LAST WEEK
Markets continued their advance as evidence of moderating inflation appeared to outweigh concerns about a slowing consumer and ongoing geopolitical pressures. While major large-cap indices were little changed, market leadership broadened beneath the surface, with small- and mid-cap stocks outperforming as investors grew more confident that the Federal Reserve may remain on hold at its September meeting. The combination of easing inflation, resilient earnings growth, and expanding market participation remains constructive for risk assets during the period, although higher energy prices, weakening consumer trends, and other market risks warrant close monitoring.
The S&P 500 gained 0.4% and reached a new record high during the week, while the Russell 2000 advanced 1.1% and the Nasdaq Composite was essentially unchanged. The Dow Jones Industrial Average declined 0.5%, as per Bloomberg data.
Source: Bloomberg Finance as of August 14, 2026.
- The most important economic development was another favorable set of inflation reports. Per the U.S. Bureau of Labor Statistics (BLS), July Consumer Price Index (CPI) data showed inflation rising 0.1% month-over-month and 3.4% year-over-year, while core CPI increased 0.2% and slowed to 2.5% year-over-year. Producer Price Index (PPI) data were equally encouraging, coming in flat for the month and cooling to 4.7% from 5.5% in June.
- These Bureau of Labor Statistics reports marked a second consecutive month of easing inflation and reinforced the view that underlying price pressures continue to moderate despite elevated energy costs associated with Middle East tensions. Markets responded by sharply reducing expectations for a September rate hike, with implied odds falling to roughly 32% from more than 50% earlier in the week.
- Despite recent volatility in portions of the AI and semiconductor ecosystem, corporate earnings remained strong during the period reviewed. Analyst estimates for both 2026 and 2027 continued to move higher, a notable departure from the typical pattern of downward revisions as the year progresses. According to the earnings revision data from Truist Wealth and FactSet, current revision trends were among the strongest periods on record.
- Importantly, the rally appears to no longer be driven primarily by mega-cap technology. Equal-weighted equity indices began outperforming their cap-weighted counterparts, suggesting investors were finding opportunities across a broader range of industries and sectors. Historically, improved breadth has often been viewed as being associated with healthier and more durable bull markets.
LOOKING AHEAD
- The week ahead shifts attention toward housing, manufacturing activity, and Federal Reserve communications. Investors will closely review the minutes from the July FOMC meeting for additional insight into the unusual 9-3 vote and the thinking behind the three dissents favoring additional tightening.
- Retail earnings may also provide an important assessment of consumer health. Results from Home Depot, Target, and Walmart should offer valuable insight into spending behavior, pricing trends, and the outlook for consumer demand heading into the fall.
- While volatility may increase as investors navigate the September Fed meeting and evolving geopolitical developments, the combination of improving earnings, moderating inflation, and expanding participation continues to indicate support for a balanced, diversified investment approach.
Amaury de Barros Conti
Partner | Vice President Investments
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