Weekend Sum Up and the Week Ahead
The Dow Jones Industrial Average (^DJI) rose 800 points or 1.9% to close at a fresh record, while the S&P 500 (^GSPC) moved up about 1.5%, and the tech-heavy Nasdaq Composite (^IXIC) climbed 1.9%. Friday’s surge came on the heels of a downbeat week for markets, as tech stocks took a hit amid AI trade doubts.
Despite the tech sell-off, market breadth held up, indicating investors weren’t fleeing equities but seeking leadership in other sectors. After Powell’s speech, cyclical sectors—including Consumer Discretionary, Industrials, Energy, and Financials—led the charge. The S&P 500 saw a 4:1 ratio of advancers to decliners, with the Equal Weight S&P 500 (SPXEW) hitting a new all-time high and the Russell 2000 rallying over 3.8% for the week.
Economic data was mixed but included notable surprises. The S&P Manufacturing PMI came in at 53.3 versus 49.7 expected, signaling expansion, while the services PMI beat at 55.4. The composite reading jumped to 55.4, its highest since December, with gains in employment, new orders, output, and input prices. Initial and continuing jobless claims were slightly above expectations, and the Leading Index came in at -0.1%.
Retail earnings drew attention. Walmart (WMT) fell 3% after missing EPS expectations, though U.S. same-store sales rose 4.6% and fiscal 2026 guidance was raised. Lowe’s (LOW) jumped 5% after beating EPS estimates and raising guidance, while Target (TGT) fell over 5% despite exceeding both revenue and EPS expectations.
Outlook
The market appears to have found a fresh catalyst in a semi-dovish Fed, with the broadening rally signaling underlying strength. All major indices have moved back above their 20-day moving averages, a key support level I highlighted last week. For these reasons, I remain bullish heading into the week ahead.
Economic Headlines
Trump Signals Furniture Tariffs Later This Year, Sparking Market Reaction
President Donald Trump on Friday announced plans to impose tariffs on imported furniture, potentially affecting a wide range of products. “Within the next 50 days, that investigation will be completed, and furniture coming from other countries into the United States will be tariffed at a rate yet to be determined,” Trump wrote on Truth Social, adding that the move would help bring furniture production back to states like North Carolina, South Carolina, and Michigan.
The announcement sent shares of major furniture and home goods companies tumbling in after-hours trading, including Wayfair, RH, and Williams-Sonoma. Wayfair imports much of its furniture, while RH and Williams-Sonoma have been working to diversify supply chains. Conversely, La-Z-Boy, which produces most of its furniture domestically, saw its stock rise on the news.
Trump has previously levied tariffs on cars, steel, and aluminum, and floated duties on imported copper, pharmaceuticals, and semiconductors. It remains unclear whether new furniture tariffs would be added on top of existing country-specific rates.
The proposed tariffs come amid broader challenges for the U.S. furniture industry. Companies like Wayfair have faced declining demand for couches, dining sets, and other home goods, driven by a slower housing market and high interest rates. Stubborn inflation has also made consumers more selective in spending on discretionary items, including furniture, travel, and apparel.
Powell Signals Possible September Rate Cut at Jackson Hole
Federal Reserve Chair Jerome Powell opened the door to a potential rate cut in September, saying Friday at Jackson Hole that “the baseline outlook and the shifting balance of risks may warrant adjusting our policy stance.” He noted that inflation risks remain “tilted to the upside,” with tariff-related pressures “now clearly visible.”
“We expect those effects to accumulate over [the] coming months, with high uncertainty about timing and amounts,” Powell said. “The question that matters for monetary policy is whether these price increases are likely to materially raise the risk of an ongoing inflation problem.” He added that the Fed “will not allow a one-time increase in the price level to become an ongoing inflation problem.”
The Fed left rates unchanged at 4.25%-4.50% at its July 31 meeting. Powell’s comments sent U.S. stocks higher and Treasury yields lower, with CME Group data showing the odds of a September cut climbing above 90%.
Fed officials remain divided on the outlook. Governors Michelle Bowman and Chris Waller, who had voted for cuts in July, support lower rates, while some regional presidents, including Cleveland’s Beth Hammack, argue that inflation risks justify keeping rates steady.
Economic Data
Traders on Friday were pricing in roughly a 91.5% chance of a September rate cut, up from 70% earlier in the morning and 85% last week. Following Powell’s remarks, 10- and 30-year Treasury yields declined, while Bitcoin and other cryptocurrencies, led by Ethereum, saw notable gains.
Cryptocurrency News
Crypto saw relatively little action this week, aside from a few notable points. Bank of America reported that through Wednesday, all major asset classes except crypto saw inflows—equities, bonds, money market, and gold funds all gained, while crypto funds experienced outflows of roughly $700 million. This report predates today’s 4.4% jump in Bitcoin spot prices, which likely included significant inflows.
On volatility, Bloomberg notes that Bitcoin’s annualized volatility has fallen to 38%, down from nearly 200% over a decade ago. With BTC swings more muted, investors seeking larger moves have turned to Ethereum, as Ether ETF volumes have matched or even exceeded Bitcoin’s on multiple trading days.
Earnings Movers
Earnings movers on Friday included Zoom (ZM), which surged on an AI-driven boost, and Ross Stores (ROST), which rose as shoppers hunted for discounts amid tariffs. Meanwhile, Intuit (INTU) and Workday (WDAY) pulled back.
What to Watch:
August could end on a high note next week after Powell speech, with Nvidia earnings on tap next week.
Economic Calendar:
- Monday (Aug. 25): New Home Sales, Dallas Fed, Building Permits
- Tuesday (Aug. 26): Philly Fed, Durable Goods, Consumer Confidence
- Wednesday Aug. 27): MBA Mortgage Applications Index
- Thursday (Aug. 28): Continuing Claims, Initial Claims, GDP, Pending Home Sales
- Friday (Aug. 29): Personal Consumption Expenditures, Personal Income, Personal Spending, U Mich Consumer Sentiment
Earnings:
- Monday (Aug. 25): PDD Holdings Inc. (PDD), Heico Corp. (HEI)
- Tuesday (Aug. 26): Bank of Montreal (BMO), KE Holdings Inc. (BEKE), MongoDB Inc. (MDB), Okta Inc. (OKTA), BOX Inc. (BOX), PVH Corp. (PVH), JOYY Inc. (JOYY)
- Wednesday (Aug. 27): Williams-Sonoma Inc. (WSM), JM Smucker Co. (SJM), Abercrombie & Fitch Co. (ANF), Foot Locker Inc. (FL), Kohl’s Corp. (KSS), Nvidia Corp. (NVDA), CrowdStrike Holdings Inc. (CRWD), Snowflake, Inc. (SNOW)
- Thursday (Aug. 28): Toronto-Dominion Bank (TD), Dollar General Corp. (DG), DICK’s Sporting Goods Inc. (DKS), Burlington Stores Inc. (BURL), Dell Technologies, Inc. (DELL), Marvell Technology Inc. (MRVL), Autodesk Inc. (ADSK), Affirm Holding Inc. (AFRM), Ulta Beauty Inc. (ULTA)
- Friday (Aug. 29): Alibaba Group Holding (BABA), Frontline Plc (FRO)
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