August 17, 2026

“Compound interest is the eight wonder of the world, he who understands it, earns it, He who doesn’t, pays it.”

Albert Einstein

US equities finished mixed for the week, with the S&P 500 and Nasdaq posting modest gains for a third consecutive week while the Dow lagged.

Here are the numbers, the S&P500 finished up .44%. the Dow Jones Industrial Average lost .63%, the Nasdaq gained .18% Internationally, the FTSE 100 had a tough week off 1.38% and the MSCI-EAFE managed a gain of .06%. the 2-Year treasury paid 4.171% and the 10-Year yield was 4.692%

So, what happened? Soft inflation readings (CPI and PPI) and weaker retail sales data reduced near-term expectations for a Federal Reserve rate hike (yeah!), supporting stocks even as Middle East tensions (related to Iran and oil flows) and selective tech weakness created volatility. The S&P 500 closed last Friday at 7,785.76, for the week (about 28 points). It reached a record closing high of 7,798.99 on Thursday before pulling back slightly on Friday. The index has now risen in 16 of the past 20 weeks and is up roughly 5% over the last three weeks. The Dow Jones Industrial Average closed at 53,732.41, down (roughly 300–340 points) and the only major index to finish lower for the week. The Nasdaq Composite closed at 26,729.16. The Russell 2000 of smaller companies rose about 1.1%. Friday’s session saw all three major indexes slip after July retail sales fell 0.6% (versus expectations of a modest rise). Earlier in the week, cooler wholesale inflation (PPI) and mixed corporate results, particularly in technology and semiconductors, influenced trading. Energy stocks benefited at times from oil price swings tied to geopolitical developments. Year-to-date, the S&P 500 was up about 13.7%, the Dow roughly 11.8%, and the Nasdaq about 15%.

Overseas, global equities were generally supported by US soft inflation data, strong corporate earnings (especially AI-related), and reduced Fed-hike fears, though Middle East tensions and oil-price swings limited risk appetite in places. Many markets traded near or at records at points during the week. Asia-Pacific: Strong overall. The MSCI Asia-Pacific index excluding Japan headed for roughly a 2.6% weekly gain (strongest in about two months). Japan’s Nikkei rose solidly (reports cited gains of 3% or higher for the week, with some sessions showing larger advances). South Korea’s KOSPI rebounded sharply (nearly +11% for the week in some accounts), snapping a multi-week losing streak on AI/semiconductor strength (Samsung and SK Hynix were notable). Hong Kong’s Hang Seng lagged (down around 2.6% in one weekly summary). Chinese mainland markets were mixed to softer. In Europe: Mixed to modestly weaker. The STOXX Europe 600 was on track for its first weekly decline in over a month in some reports, though several national indices (DAX, FTSE 100, CAC 40, IBEX) had touched records earlier on strong Q2 earnings (STOXX companies tracking 22% profit growth, led by banks, tech, and energy). Which is why we still like foreign stocks.

What’s the FED up to? Federal Reserve’s target range for the federal funds rate remained unchanged at 3.50%–3.75% (effective rate around 3.63%). There was no FOMC meeting during the week; the next is scheduled for mid-September. Soft July inflation data and the retail July existing home sales.

In Economic news, the week was dominated by US inflation and consumption data that eased near-term Federal Reserve rate-hike expectations. Soft readings reduced market-implied odds of a September hike (from near 50% early in the week toward the high 20s percent range).

Key releases included July Consumer Price Index (CPI) (Wednesday, August 12): Headline rose 0.1% month-over-month and 3.4% year-over-year (easing from 3.5% in June; in line with forecasts). Core CPI (ex-food and energy) rose 0.2% month-over-month and 2.5% year-over-year (easing from 2.6%). The report reinforced a gradual cooling trend. July Producer Price Index (PPI) (Thursday, August 13): Headline was flat (0.0% month-over-month), softer than expected. Core PPI rose 0.2%. Year-over-year measures eased (headline around 4.7% in some reports, down from higher prior readings). This further reduced rate-hike pressure. July Retail Sales (Friday, August 14): Fell 0.6% month-over-month (versus expectations of a modest +0.1% gain). Core measures were also weak. The miss was partly attributed to the earlier timing of Amazon’s Prime Day shifting some spending into June. The data raised mild concerns about consumer momentum heading into Q3.

In the housing market and mortgage rates news. July Existing-Home Sales (Tuesday, August 11): Fell 1.7% month-over-month to a seasonally adjusted annual rate of 4.06 million units (near expectations). Sales were still up 0.7% year-over-year. The median existing-home price rose to $434,100 (+2.0% YoY). Inventory stood at about 1.54 million units (4.6 months’ supply). The market remained stable but constrained by elevated mortgage rates. Mortgage rates edged lower. Freddie Mac’s Primary Mortgage Market Survey for the week ending August 13 showed the average 30-year fixed rate at 6.67% (down 2 basis points from the prior week—the first decline in six weeks) and the 15-year fixed at 5.96%. Rates remain elevated compared with recent years and continue to constrain affordability, though they are only modestly above year-ago levels in some readings. Mortgage Bankers Association data for the week ending August 7 (reported mid-week) showed total applications rising 3.6% (seasonally adjusted), with purchase applications up 3% and refinances up 5%. Activity remains sensitive to even small rate moves. Overall, the housing market has shown resilience with sales holding above year-ago levels and prices are still rising modestly, but elevated borrowing costs and limited inventory continue to limit stronger recovery. Demand appears responsive to rate relief when it occurs. Sales miss lowered market-implied odds of a September hike, extending expectations for a prolonged pause.

So, in summary, according to Reuters forecast, Wall Street’s consensus outlook for US equities (primarily the S&P 500) for the remainder of 2026 is moderately constructive, with most major forecasts pointing to modest further gains driven by strong corporate earnings and AI-related investment, though risks around inflation, interest rates, and geopolitics remain elevated. We agree, what could change the result? An end to the Iranian war and the free flow of oil, if so, we are more bullish.

Mike