Categories:
Key areas of focus
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Inflation and growth: Wednesday brings the second estimate of Q2 GDP and July personal income, spending, and PCE inflation. The real focus will be whether the Fed’s preferred inflation measure reinforces or challenges the more cautious policy message contained in the July FOMC minutes.
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Housing and the consumer: Tuesday’s FHFA and Case-Shiller home-price indexes and new home sales report will provide another read on housing conditions after the prior week’s sharp decline in housing starts and pending sales.
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Jackson Hole and earnings: Investors will closely follow the Federal Reserve’s Jackson Hole symposium for guidance on the policy outlook, while several important technology earnings reports, including Nvidia, could further test sentiment toward AI spending and valuations.
Week in review
US equity markets finished the week lower as rising long-term Treasury yields, higher oil prices, and renewed pressure on technology shares outweighed a late-week rebound. Monday opened with generally constructive regional data, as the Empire State manufacturing index and the NAHB Housing Market Index both rising, although builder confidence remained subdued. Tuesday brought a more cautious housing picture: total housing starts fell 12.4% in July, while single-family starts declined 9.9%. Building permits offered a more constructive forward signal, rising 5.0%, but pending home sales fell 2.3% during July. Industrial production and capacity utilization edged up, suggesting that manufacturing output remained positive despite weakness in residential construction. Wednesday’s focus shifted to monetary policy, as the Fed released minutes from its July 28–29 meeting. The minutes showed that many participants viewed additional tightening as potentially necessary if inflation failed to decline, reinforcing the market’s sensitivity to incoming inflation data. Thursday added a stronger regional manufacturing signal, with the Philadelphia Fed business conditions index rising, while initial jobless claims declined. Friday brought a stronger growth read as the preliminary S&P Global Composite PMI climbed, driven by a strong Services PMI, while Manufacturing remained in expansion. Stocks rebounded Friday but still finished lower for the week.
Spotlight
The key takeaway from last week was the growing tension between resilient economic activity and rising long-term borrowing costs. The week’s data did not point to a broad economic contraction: industrial production increased, jobless claims remained relatively low, both regional manufacturing surveys were expansionary, and the preliminary S&P Global Composite PMI rose. However, that resilience provided limited comfort to markets as longer-term Treasury yields moved toward multi-year highs amid concerns about fiscal sustainability, government borrowing needs, and renewed energy-driven inflation pressure. The 30-year Treasury yield reached 5.34% during the week, while the 10-year yield was near 4.74% late Friday, weighing most heavily on technology and other longer-duration growth assets. Oil added another layer of pressure, gaining 5.62% for the week amid geopolitical and supply concerns. Beneath the surface, the issue was not simply whether the economy remained healthy, but whether stronger activity, higher energy prices, and persistent fiscal concerns would keep long-term rates elevated enough to pressure valuations. That tradeoff leaves markets increasingly dependent on evidence that inflation can continue to moderate without a more pronounced slowdown in growth.
Markets
Sectors
Style & Market Cap
Sources
Empire State Manufacturing Survey: Federal Reserve Bank of New York, Empire State Manufacturing Survey, August 2026, retrieved from the Federal Reserve Bank of New York; https://www.newyorkfed.org/medialibrary/media/survey/empire/empire2026/2026_08_empire-state-manufacturing-survey.pdf
Home Builder Sentiment: National Association of Home Builders, Affordability Pressures Keep Builder Confidence Low, August 17, 2026, retrieved from NAHB; https://www.nahb.org/news-and-economics/press-releases/2026/08/affordability-pressures-keep-builder-confidence-low
Housing Starts and Building Permits: United States Census Bureau, Monthly New Residential Construction, July 2026, retrieved from the U.S. Census Bureau; https://www.census.gov/construction/nrc/current/index.html
Industrial Production and Capacity Utilization: Board of Governors of the Federal Reserve System, Industrial Production and Capacity Utilization, July 2026, retrieved from the Federal Reserve; https://www.federalreserve.gov/releases/g17/current/default.htm
Pending Home Sales: National Association of REALTORS®, NAR Pending Home Sales Report Shows 2.3% Decrease in July, August 18, 2026, retrieved from NAR; https://www.nar.realtor/newsroom/NAR-Pending-Home-Sales-Report-Shows-2-3-Decrease-in-July
Federal Reserve Meeting Minutes: Board of Governors of the Federal Reserve System, Minutes of the Federal Open Market Committee, July 28–29, 2026, released August 19, 2026, retrieved from the Federal Reserve; https://www.federalreserve.gov/newsevents/pressreleases/monetary20260819a.htm
Philadelphia Fed Manufacturing Survey: Federal Reserve Bank of Philadelphia, Manufacturing Business Outlook Survey, August 2026, retrieved from the Philadelphia Fed; https://www.philadelphiafed.org/surveys-and-data/regional-economic-analysis/mbos-2026-08
Jobless Claims: U.S. Department of Labor, Unemployment Insurance Weekly Claims, August 20, 2026, retrieved from the U.S. Department of Labor; https://www.dol.gov/sites/dolgov/files/OPA/newsreleases/ui-claims/20261413.pdf
Leading Economic Index: The Conference Board, The Conference Board Leading Economic Index for the United States, July 2026, released August 20, 2026, retrieved from The Conference Board; https://www.conference-board.org/topics/us-leading-indicators/index.cfm?hsa_cam=22625443146&hsa_src=x&hsa_ver=3
S&P Global PMIs: S&P Global, Flash U.S. Manufacturing, Services and Composite PMIs, August 2026, retrieved from S&P Global; https://www.pmi.spglobal.com/
Market Data: Morningstar Direct using Morningstar Indices.
Author:
Nate Garrison
CFA®, CAIA®, CIPM®, FRM®
Chief Investment Officer
World Investment Advisors, LLC