Market Update August 17
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 17, 2026
Strong corporate earnings reports for the second quarter propelled the S&P 500 higher for the third week in a row, resulting in a new all-time high last Thursday. The index has risen 4% thus far in August and is up over 14% year-to-date. Mid-cap and small-cap stocks have been strong performers, as well, up almost 20% and 26% year-to-date, respectively.
Although corporations have exhibited strong performance, various data items suggest moderation within the consumer sphere. Retail sales contracted 0.6% in July, the first decline in nine months, and the largest decline in fourteen months, pointing to a pullback in consumer spending. Earnings reports this week from Walmart, Home Depot, Lowe’s, and Target should provide additional insight into consumer-spending trends. 30-year mortgage rates are hovering just under 7%, dampening home purchase activity. Existing home sales dropped 1.7% in July to a seasonally adjusted annual rate of 4.06 million units. According to the National Association of Realtors, the national median price for all housing types rose 2% year-over-year to $434,100 marking 37 straight months of annual price gains. WTI oil prices ended last week still elevated at $82.
Inflation data provided additional momentum to the stock market rally. July CPI came in as expected, with headline inflation of +0.1% for the month and core inflation (excludes food and energy) of +0.2% (3.4% and 2.5% year-over-year, respectively). The producer price index (PPI) also showed moderation in July, coming in flat at 0.0% for the month (expectations were for a 0.2% increase), up 4.7% on an annualized basis.
Putting it all together, relatively favorable inflation data and softer consumer activity data supports the notion that the Federal Reserve will likely leave interest rates unchanged at their next meeting in September. Futures markets are currently forecasting 66% odds of a rate hike before year-end, though.
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!
