Last week, America looked at the economy and thought, “Seems straightforward enough.” Strong earnings, healthy hiring and record highs were the easy part. The deeper you looked, the weirder and more technical the story became.
- The S&P 500 rose 0.49% and the Nasdaq gained 0.85%. Technology led the advance. Large caps beat small caps and value outperformed growth.
- The Bloomberg U.S. Aggregate Bond Index inched up 0.13%, another week of returns so small they could be mistaken for a rounding error. The 10-year Treasury yield held at 4.73%, while the 30-year slipped to 5.21%.
- Gold fell 3.2% to roughly $4,530 per ounce, while crude oil dropped 4.2% to about $83 per barrel. It was a rare week when both doomsday investors and gasoline producers had to lower their expectations.
- The U.S. dollar strengthened modestly against the euro and was essentially flat versus the pound and yen. Somewhere, an American tourist just became slightly more confident ordering lunch abroad and immediately less confident reading the receipt.
- The second estimate of 2Q26 GDP held at 1.5%. The economy is still moving forward, but with the enthusiasm of someone hauling six bags of groceries up three flights of stairs while insisting they're totally fine. Underneath, private domestic demand grew 4.2%, revealing a lot more horsepower than the headline GDP number suggested. Consumers kept spending, businesses kept investing and corporate profits surged; stronger imports and weaker government spending helped make the overall GDP number look much softer than the underlying economy.
- July core PCE inflation, which strips out volatile food and energy prices and serves as the Fed's go-to inflation gauge, increased 0.2% and remained at 3.3% year over year. The road to the Fed's 2% target continues to feature more traffic than expected.
- July durable-goods orders climbed 1.1%, surprising to the upside. American manufacturing keeps showing up like a supporting character who somehow survives every season finale. Orders rose for the fourth time in five months, suggesting reports of the sector's demise remain somewhat exaggerated.
- Wholesale inventories jumped 1.3% in July. Warehouses across America are beginning to resemble the final scene in Raiders of the Lost Ark, except with air fryers and replacement parts instead of biblical artifacts.
- Consumer confidence weakened across both major August surveys. The Conference Board's confidence index slipped to 89.4 from a revised 90.2 in July, while the University of Michigan's sentiment index fell to 51.7 from 55.2. Americans are feeling less like “Woo-hoo, let's buy a jet ski!" and more "Let's keep the receipt until 2034.“
- Initial jobless claims fell 4,000 to 203,000 in the week ended Aug. 22. Continuing claims fell 18,000 to 1.778 million in the week ended Aug. 15. Employers still seem reluctant to let workers go after spending the better part of the decade trying to find them.
- Second-quarter earnings season is winding down, with 483 S&P 500 companies reporting, 86% beating expectations and earnings growth approaching 53%. Energy, communication services, consumer discretionary, and technology all posted blockbuster growth. Corporate America appears to have spent the quarter living in a considerably more cheerful economy than the one consumers keep describing.