Rise and Expectations: Wall Street Celebrates Highs While Awaiting Fed Signals

Wall Street hit records driven by moderate inflation and expectations of a Fed rate cut in September. UnitedHealth and Amazon earnings stood out, while the market closely watches Fed minutes and retail reports.
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Blog-Weekly-Aug18

Rise and Expectations: Wall Street Celebrates Highs While Awaiting Fed Signals

New York markets experienced a week of records and enthusiasm as investors await clearer signals on monetary policy. 

A combination of historic highs, solid macro data, and the start of retail earnings season fueled a dynamic of cautious euphoria.

Index Performance

  • S&P 500 reached a new intraday record, closing at 6,468.54 points on August 14, while the intraday peak was 6,481.34 on August 15.

  • Nasdaq Composite also hit a record high on August 13, closing at 21,713.14 with an intraday peak of 21,803.75.

  • Dow Jones touched its intraday high on August 15, though it did not surpass its record close.

  • For the week, Dow gained 1.7%, S&P 500 rose 0.9%, Nasdaq advanced 0.8%, and Russell 2000 led with +3.1%.

Market Drivers

Inflation and Fed Expectations

The Consumer Price Index (CPI) showed a moderate increase, with the headline figure at 2.7% year-over-year and core inflation (excluding food and energy) at 3.1%. This reinforced the perception of economic resilience and strengthened expectations of a rate cut by the Fed in September, with odds estimated around 85%.

Key Earnings and Sector Performance

  • UnitedHealth surged after news that Berkshire Hathaway acquired nearly 5 million shares, lifting the Dow.

  • Amazon rallied after announcing an expansion of its grocery delivery business.

  • In contrast, CoreWeave dropped after reporting larger-than-expected losses and the expiration of its lock-up period; Applied Materials also retreated on cautious guidance, weighing on semiconductors.

  • Sectors such as financials, construction, biotech, and airlines outperformed, partly supported by favorable monetary expectations.

Geopolitics and Macro Trends

  • Tensions between the U.S., Russia, and Ukraine resurfaced ahead of diplomatic talks, contributing to modest futures selling and investor caution.

  • The dollar remained firm against other currencies, Treasury yields ticked higher, and oil prices recovered modestly.

Sector Overview

  • Technology and semiconductors faced corrections amid signs of slowing growth expectations.

  • Retailers came into focus, with key reports from Walmart, Home Depot, Target, and Lowe’s expected in the coming days.

  • Energy, financials, biotech, and airlines stood out, reflecting a rotation into cyclical and defensive sectors.

What to Watch Next

  • The release of Fed minutes and Jerome Powell’s speech at Jackson Hole will be decisive for monetary policy outlooks.

  • Earnings from major retailers will provide insight into consumer strength, a critical driver in the current cycle.

  • Any significant geopolitical developments—particularly in the U.S.-Russia-Ukraine conflict—could impact risk sentiment and oil prices.

  • Macro data such as retail sales, employment, and inflation will remain closely watched.

Conclusion

The week reflected a rising market, supported by stable macro data, mixed corporate earnings with positive surprises in key sectors, and growing speculation over potential monetary easing. Still, caution lingers: the Fed’s tone remains more prudent than expansionary. Powell’s upcoming speech at Jackson Hole and retail earnings could determine whether this rally extends or takes a pause.

The opinions in the preceding commentary are as of the date of publication and are subject to change.  Information has been obtained from third party sources we consider reliable, but we do not guarantee the facts cited are accurate or complete.  This material is not intended to be relied upon as a forecast or investment advice regarding a particular investment or the markets in general, nor is it intended to predict or depict performance of any investment. We may execute transactions in securities that may not be consistent with the report’s conclusions.  Investors should consult their financial advisor on the strategy best for them.  Past performance is no guarantee of future results. For illustrative purposes only. Does not represent an investment recommendation. For more information, please see our Social Media Disclosure.

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Sources: Bloomberg, Reuters Energy, CNBC Markets, ISM Manufacturing Report

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