U.S. equities were mixed but generally positive last week, with the S&P 500 gaining 0.4% for its third consecutive weekly advance and the Nasdaq edging 0.1% higher, while the Dow declined 0.6%. Both the S&P 500 and Russell 2000 reached record highs during the week, supported by another strong earnings season, continued enthusiasm surrounding artificial intelligence (AI), and generally favorable inflation data. Second-quarter corporate earnings have remained exceptionally strong, providing an important foundation for the market’s advance. Consumer spending showed some signs of slowing, with July retail sales declining 0.6%, although sales remained 5% above year-ago levels. Treasury yields moved modestly higher, with the 10-year U.S. Treasury ending the week near 4.68%. Despite ongoing geopolitical uncertainty, higher interest rates, and periodic concerns about the consumer, the U.S. economy and corporate earnings remain healthy, and continue to surprise many investors. Our thesis remains the same: strong earnings and resilient consumer spending are telltale signs of continued economic expansion.

U.S. & Global Economy

• Economic data last week pointed to a modest cooling in inflation, along with some signs that consumers are starting to pull back. Consumer inflation eased slightly in July, with CPI rising 3.4% year-over-year, down from 3.5% in June, while producer prices were little changed from the prior month. Retail sales also fell 0.6% in July after a 0.2% gain in June, marking the first monthly decline in nine months. Consumer sentiment weakened as well, although inflation expectations remained stable. Overall, the data suggest inflation is gradually cooling, while consumer spending remains relatively healthy, although recent readings have been a touch softer.

Policy and Politics

• Geopolitical risks remain elevated, particularly in the Middle East. Hopes for progress on reopening the Strait of Hormuz faded as negotiations with Iran remain stalled, and tensions increased following attacks on UAE oil tankers. Shipping through this critical energy corridor remains severely restricted, keeping upward pressure on oil prices and global energy markets. Meanwhile, the Russia-Ukraine war continues with little near-term prospect for resolution, although efforts to restart negotiations remain alive. In Gaza, diplomatic efforts continue despite disagreements over the path toward a more durable peace, while U.S.-China tensions over trade and technology remain another important global issue. Despite all this geopolitical noise, financial markets continue to move forward, largely looking beyond today’s headlines and anticipating eventual resolutions. Some conflicts, particularly the Russia-Ukraine conflict, could persist for some time.

For the week ahead, focus will be on a few remaining companies reporting earnings, along with the latest economic data and what it means for the outlook on interest rates. Results from major consumer-focused companies, including Home Depot, Lowe’s, Target, TJX, and Walmart should provide another look at how consumers and businesses are holding up. Recent inflation readings have been encouraging, but that progress could prove temporary if oil prices continue to move higher, with U.S. crude now above $82 per barrel. At the same time, weaker-than-expected job growth creates another challenge for the Fed as it balances a softer labor market against the risk of renewed inflation from higher energy prices. The bond market continues to reflect lower expectations for a rate hike at the September meeting, but the path forward remains uncertain. With several moving pieces in play, we believe investors are best served by staying diversified, disciplined, and focused on their long-term investment plans. As always, please contact your team at Valley National Financial Advisors for any questions.

Economic Numbers to Watch This Week

• U.S. Empire State Manufacturing Survey for August 2026, prior 15.6
• U.S. NAHB Housing Market Index for August 2026, prior 34
• U.S. Housing Starts for July 2026, prior 1.4M
• U.S. Import Prices for July 2026, prior 0.3%
• U.S. Pending Home Sales Index (Month-over-Month) for July 2026, prior -5.4%
• U.S. Federal Open Market Committee Meeting Minutes for August 2026
• U.S. Philadelphia Fed Business Outlook Survey for August 2026, prior 41.4
• U.S. Initial Jobless Claims for Week Ended August 15, 2026, prior 209K
• U.S. Leading Indicators for July 2026, prior -0.2%
• U.S. Flash Manufacturing PMI for August 2026, prior 53.8
• U.S. Flash Services PMI for August 2026, prior 53.6

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