Market Update August 10

By Twickenham Advisors on August 18, 2026

Sources: Twickenham Advisors, Morningstar Direct, Federal Reserve Bank of New York, Federal Reserve Bank of St. Louis, U.S. Department of Treasury, and Ycharts as of August 10, 2026

As of late last week, 88% of companies in the S&P 500 have reported actual results for the second quarter. Of these companies, 86% have reported actual EPS above estimates. In aggregate, companies are reporting earnings that are 29.2% above estimates. If 29.2% is the actual number for the quarter, it will mark the highest earnings surprise reported by the index since FactSet began tracking this metric in 2008. The current record for the highest earnings surprise is 23.2%, which occurred in Q2 2020. Excluding unusually large earnings surprises reported by Alphabet and Amazon.com, the surprise earnings percentage for the S&P 500 for Q2 2026 would fall to 10.9% from 29.2%. However, this surprise percentage is still above the 5-year and 10-year averages.

The Bureau of Labor Statistics reported on Friday that the U.S. economy saw an unexpected decline in jobs during July. Nonfarm payrolls declined by 23,000 in July with the prior two months also being revised lower by 103,000. The revised numbers brought the 12-month average down to just 34,000. The unemployment rate ticked down to 4.1%, as the labor force participation rate fell further to 61.4%, its lowest in more than five years, another indication that fewer Americans were working or looking for jobs. The U.S. labor market remains in a low hire/low fire mode, which is not especially robust, however, with labor force participation declining, even small job gains are enough to keep the unemployment rate moving sideways, assuming the U.S. economy continues to grow.

Data released last week indicates that both the manufacturing and service sectors of the economy are on solid footing. Manufacturing activity expanded for the seventh consecutive month, growing at the fastest rate in more than four years. Services were solid in July, expanding at the fastest pace in nine months; FIFA World Cup and Independence Day spending likely boosted spending.

As we always remind our clients, a well-diversified portfolio is the key to compounding wealth over the long term: stay invested and stay diversified!