Last week was marked by contradiction. Consumers pulled back, yet a cluster of forces kept interest rate risk dictating the pace of the economy.

 

Inflation remained stubborn, oil prices climbed on the U.S. threat of new economic sanctions on Iran, and federal borrowing pushed higher. Ultimately, long-term Treasury yields ended up setting the market’s mood, and stocks closed lower.

 

Here’s how the major indexes performed, and the headlines behind the numbers.

 

 

Stock Index Performance

• The S&P 500 fell 1.43%.
• The Nasdaq 100 dropped 2.45%.
• The Dow Jones Industrial Average edged lower 0.85%.

 

 

What Drove the Numbers

Yields set the tone. Rising long-term Treasury yields drove the week’s trading. Higher yields raise loan costs for households and businesses, and make future corporate profits worth less today. The Treasury Department tried to calm markets on August 19th by buying back more long-term debt, but investors judged the move too small to matter.

 

A mixed economic picture. Throughout August, data has shown that consumers have grown cautious. Walmart’s disappointing profit outlook sent its shares down roughly 9% on Thursday, a sharp reminder that shoppers may be tightening their belts. However, last week brought other signs that pointed the opposite way. The Purchasing Managers' Index (PMI), a broad measure of business activity, hit its strongest level since 2022, led by the service sector.

 

The Federal Reserve’s balancing act. Minutes from the Fed’s July meeting, released on August 19th, showed policymakers more worried about inflation than markets expected, with several officials open to further rate hikes. Weaker job and inflation data earlier in the month had raised hopes for rate cuts, but strong recent activity and high oil prices complicated that picture. Markets are increasingly betting on a rate hike sometime in the second half of 2026.

 

 

 

The Week Ahead

Investors get July’s core inflation and the latest GDP data Tuesday (August 25th), and Nvidia reports earnings on Wednesday (August 26th). The ideal outcome is cooling inflation, a resilient consumer, and continued AI spending strength. A hot inflation reading or a Nvidia miss could hit growth stocks hard, given tech’s weight in the indexes.

 

Fed Chair Kevin Warsh delivers his Jackson Hole keynote Friday (August 28th), weeks before the Fed’s next rate decision. However, markets will still want to know whether he is considering inflation and rising yields as the greater risk, or leans toward recent consumer softness.

 

 

 

 

 

 

This presentation is not an offer or a solicitation to buy or sell securities. The information contained in this presentation has been compiled from third-party sources and is believed to be reliable; however, its accuracy is not guaranteed and should not be relied upon in any way whatsoever. This presentation may not be construed as investment, tax or legal advice and does not give investment recommendations. Any opinion included in this report constitutes our judgment as of the date of this report and is subject to change without notice.

Additional information, including management fees and expenses, is provided on our Form ADV Part 2 available upon request or at the SEC’s Investment Adviser Public Disclosure website, www.adviserinfo.sec.gov. Past performance is not a guarantee of future results.