|
♦ Waterloo Capital ♦
Last Week
on Wall Street
|
WEEK OF AUGUST 10TH, 2026
|
|
|
S&P 500
7,786
▲ +0.40% WK
|
DOW JONES
53,732
▼ -0.60% WK
|
NASDAQ
26,729
▲ +0.10% WK
|
10-YR YIELD
4.69%
▲ +3 BPS WK
|
|
|
LEAD Markets & Macro
|
Two soft inflation readings carried the index past a level it had never touched, and then Friday morning brought the spending and sentiment numbers. The tape spent the week arguing with itself.
|
Three straight winning weeks for the S&P 500. The index closed at a record on Thursday, clearing 7,800 for the first time, and the Nasdaq scraped out a third weekly gain behind it. The Dow went the other way and finished lower. Two months after a jobs report showed the economy shedding positions outright, the benchmark sits roughly a quarter above where it traded at the end of the first quarter.
The two inflation reports that landed midweek did the lifting. Both came in cool enough to push the September rate decision further away from a hike, and stocks took the hint inside of an hour on each release, with more on that below. Energy was the week's best sector, and it got there on a geopolitical headline rather than an economic one, which is its own kind of tell.
Then Friday morning arrived. July retail sales fell against a Street that had penciled in a small gain, the first monthly decline in nine months, and the University of Michigan's preliminary August sentiment reading handed back the improvement households had shown across June and July. Stocks drifted lower through the afternoon, though not by enough to cost the S&P its week. The rest of the retail picture lands over the next several sessions, with Target, Walmart, Home Depot and Lowe's all reporting.
For diversified portfolios, the useful thing about a week like this one is the disagreement inside it. The inflation data described a backward-looking July in which prices at the pump were falling. The spending and sentiment data described an American household in August that is not feeling much relief. Both readings can be accurate at once, and portfolios holding broad equity exposure alongside fixed income at meaningfully higher yields than were available a few years ago do not have to settle that argument this week. The ones built around a single view of the consumer do.
|
BOTTOM LINE
Two cool inflation prints, a record close above 7,800, and a Friday that reminded everyone the consumer gets a vote too. The week added a record and subtracted some confidence, and balanced portfolios finished it holding both.
|
|
|
By the Numbers
| ▸ |
Record close: the S&P cleared 7,800 for the first time Thursday, with an intraday high of 7,816.70 |
| ▸ |
Index split: the Dow finished the week lower while the S&P and Nasdaq each logged a third straight weekly gain |
| ▸ |
July retail sales: down 0.6% against a Dow Jones consensus of +0.1%, the first monthly decline in nine months |
| ▸ |
Consumer sentiment: preliminary August University of Michigan reading of 51.0, down from 55.2 in July |
| ▸ |
Volatility: the VIX finished near 14.2, an unremarkable August register |
| ▸ |
Volume: 16.1 billion shares changed hands Thursday, under the 20-session average of 17.5 billion |
|
|
|
· Two Stories That Moved the Tape ·
The Week's Defining Headlines
|
|
|
STORY 01 Macro · Inflation & Rates
|
The key takeaway,
Wednesday's consumer price report landed on consensus and marked a second straight month of slowing. Thursday's wholesale reading came in flat when economists had modeled an increase. By the closing bell, traders had cut the odds of a September rate hike by roughly a third from where they stood a week earlier, and the S&P had a record.
|
Shelter did most of the work in July, accounting for roughly two-thirds of the monthly increase in the headline index, and the energy component fell outright for the month as pump prices eased. Grocery prices ticked lower. None of that makes the annual rate comfortable, since it still runs more than a point above where the Federal Reserve wants it, but the direction has held across two consecutive reports and the composition looked better than the headline implied. Thursday's producer price index then came in unchanged, undershooting the increase the Street had modeled, and the pair of prints together carried more weight than either one alone.
The rates market moved on the second one. Futures had spent the summer treating a September increase as a live question, and by Thursday afternoon that probability had fallen by about a third in the space of a week. The long end told a more complicated story: the Treasury's ten-year auction this week cleared at the highest yield since the financial crisis, a reminder that investors still want compensation to fund the deficit whatever the next meeting produces. The committee does not gather again until September 16, which leaves an August jobs report and one more consumer price reading standing between the market and the decision. Ian Lyngen at BMO Capital Markets read the release as leaving the door to a pause open without closing the question.
|
DATA THAT DROVE THE STORY
| ■ | July CPI: +0.1% on the month and +3.4% year over year, down from 3.5% in June and in line with the Dow Jones consensus |
| ■ | Core CPI: +0.2% on the month and +2.5% year over year, down from 2.6% |
| ■ | Shelter: +0.1% on the month, roughly two-thirds of the headline increase |
| ■ | Energy index: down 1.5% for the month, still up 14.7% over twelve months |
| ■ | July PPI: unchanged on the month against a Dow Jones consensus of +0.2%, following a 0.1% decline in June |
| ■ | September hike odds: roughly 34% by week's end, down from about 55% a week earlier, per CME FedWatch |
|
Source: CNBC: CPI inflation report, July 2026 →
|
|
|
|
STORY 02 Commodities · Geopolitics
|
The key takeaway,
The U.S. said Thursday it could hold its naval blockade of Iranian ports with no end date, and warned of financial measures on top of it. Crude climbed into the weekend and energy finished as the best sector in the S&P 500, in a week whose headline was falling inflation.
|
Ceasefire talks between Washington and Tehran stalled this week, and both capitals spent it hardening. Defense Secretary Pete Hegseth told reporters that U.S. forces could keep the blockade of Iranian ports in place indefinitely. Treasury Secretary Scott Bessent, in a television interview, previewed measures aimed at Iran's economic isolation. Thursday evening, two vessels belonging to Abu Dhabi National Oil Company were attacked while transiting the Strait of Hormuz, which the UAE government condemned as an Iranian attack. Traders read the combination as a longer war rather than a nearer settlement, and priced the barrel accordingly.
What makes the move worth noticing is the backdrop it happened against. The International Energy Agency cut its 2026 global supply outlook to the lowest level it has published this year, OPEC trimmed its demand growth forecast for a fourth consecutive time, and U.S. crude inventories posted their largest weekly build in more than three and a half years. Storage held up better than feared, demand looked softer, and crude rose anyway, which is what a supply-risk premium looks like when it reasserts itself. Whether that filters into consumer prices is the open question investors carry into the fall: energy has been the swing factor in the inflation data all year, and the July report the market cheered captured a month when pump prices were falling. Past pass-throughs have arrived with a lag and have not been uniform across categories.
|
DATA THAT DROVE THE STORY
| ■ | Crude: WTI traded near $82 a barrel Friday and Brent near $88, both up roughly 4.5% on the week |
| ■ | Sector leadership: energy tracked a weekly gain of roughly 7%, the best group in the index |
| ■ | IEA supply outlook: cut by a further 600,000 barrels per day, to a 4.3 million bpd decline for 2026, its deepest of the year |
| ■ | OPEC demand outlook: 2026 growth trimmed to 580,000 bpd, a fourth consecutive downward revision |
| ■ | U.S. inventories: largest weekly crude build in more than three and a half years |
| ■ | Hormuz transit: averaged 4.9 million bpd in the second quarter against 21.6 million bpd in the fourth quarter of 2025, per the EIA |
|
Source: CNBC: Oil steadies after U.S. threatens to blockade Iran indefinitely →
|
|
|
|
· Other Things Worth Knowing ·
Around the Water Cooler
Six stories from this week worth your morning coffee.
|
|
EARNINGS · NETWORKING
Cisco beat, guided higher, and the stock fell 8% anyway
Record revenue and $9.3 billion of hyperscaler AI orders for the year. Piper Sandler still called the guide conservative.
|
INDEXING · MARKETS
Reddit joins the S&P 500 before Tuesday's open
It replaces AvalonBay, which Equity Residential is absorbing. Only the second pure-play social platform in the index.
|
TEXAS · POWER
The data center freeze on the Texas grid is still in force
ERCOT paused its first batch of large-load reviews after the governor ordered an audit, and asks the PUCT for an exception on August 20.
|
| |
|
SEMIS · AI CAPEX
Applied Materials posted a record quarter and got sold
Revenue of $9.12 billion, an earnings beat, guidance above consensus, and shares lower after hours. The bar has moved.
|
STRATEGY · TARGETS
JPMorgan lifts its S&P 500 target to 8,000
The second increase in two months, on earnings strength and evidence that AI spending is converting into customer demand.
|
EARNINGS SEASON · BREADTH
Second-quarter profit growth is the fastest in five years
S&P 500 earnings are tracking above 50% growth with nearly 90% of companies beating, per FactSet. Broadening, at last.
|
|
|
Technical trading models are mathematically driven based upon historical data and trends of domestic and foreign market trading activity, including various industry and sector trading statistics within such markets. Technical trading models, through mathematical algorithms, attempt to identify when markets are likely to increase or decrease and identify appropriate entry and exit points. The primary risk of technical trading models is that historical trends and past performance cannot predict future trends and there is no assurance that the mathematical algorithms employed are designed properly, updated with new data, and can accurately predict future market, industry and sector performance.
Disclosure: Investing involves risk, including the possible loss of principal and fluctuation of value. Past performance is no guarantee of future results. This newsletter is not intended to be relied upon as forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed are as of the date noted and may change as subsequent conditions vary. The information and opinions contained in this letter are derived from proprietary and nonproprietary sources deemed by Waterloo Capital to be reliable. The letter may contain "forward-looking" information that is not purely historical in nature. Such information may include, among other things, projections and forecasts. There is no guarantee that any forecast made will materialize. Reliance upon information in this letter is at sole discretion of the reader. Please consult with a Waterloo Capital financial advisor to ensure that any contemplated transaction in any securities or investment strategy mentioned in this newsletter aligns with your overall investment goals, objectives and tolerance for risk. Additional information about Waterloo Capital is available in its current disclosure documents, Form ADV, Form ADV Part 2A Brochure, and Client Relationship Summary report which are accessible online via the SEC's Investment Adviser Public Disclosure (IAPD) database at www.adviserinfo.sec.gov, using SEC # 133705. Waterloo Capital is neither an attorney nor an accountant, and no portion of this content should be interpreted as legal, accounting or tax advice.
|
|