Stocks struggled to find momentum last week as markets digested a mix of encouraging and concerning economic signals. Early in the week, equities pulled back following renewed tariff pressures and ongoing concerns over global growth. However, a stronger-than-expected July Consumer Price Index (CPI) report, which showed inflation easing slightly, helped support sentiment midweek.
By Friday, markets were mixed: the S&P 500 and NASDAQ held near record levels, while the Dow and small-cap Russell 2000 slipped modestly. Traders continue to anticipate a potential Federal Reserve rate cut in September as weaker labor market data and slowing business activity weigh on outlooks. Bond yields moved lower, the U.S. dollar softened, and crude oil prices rebounded slightly from the prior week’s decline.
Last Week’s Economic News
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Inflation data showed some relief, as the Consumer Price Index rose very slightly in July, but slower than June’s increase. Year-over-year, consumer prices were up 3.1%, with core inflation.
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Producer prices ticked up in July, following a flat June, suggesting cost pressures for businesses remain contained despite tariff-related concerns.
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Retail sales increased in July, driven by gains in online shopping and consumer staples, highlighting steady consumer demand.
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Weekly unemployment claims remained elevated at 225,000, signaling persistent softness in the labor market after recent disappointing jobs reports.
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Business sentiment surveys pointed to slower activity in both manufacturing and services, with tariffs cited as a major concern for costs and hiring plans.
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Energy markets saw volatility, but oil prices recovered slightly as traders assessed OPEC+ supply plans and potential global demand impacts from trade disruptions.
Eye on the Week Ahead
Markets will look for further clarity from Federal Reserve officials this week, with several scheduled to speak publicly ahead of September’s policy meeting. Housing data, including building permits and existing home sales, will also be closely watched, alongside continued updates on inflation expectations.
Have a nice week!
Sincerely,
Robert G. Carpenter