Capital at Work: Week of August 14, 2026

Stocks edged to records as inflation cooled and the consumer flinched

The S&P 500 touched another record on Thursday and finished a third straight winning week, though just barely. Tame inflation numbers gave markets their relief midweek. A tired American consumer took some of it back on Friday.

Also last week: Russell 2000 +1.2%, MSCI EAFE +0.6%, MSCI EM +2.7%, Bloomberg U.S. Aggregate −0.1%.

Wednesday brought the number the whole market was waiting for. July consumer prices rose 0.1 percent for the month and 3.4 percent for the year, down from 3.5 percent in June and matching forecasts almost exactly. Core inflation, which sets aside food and energy, slowed to 2.5 percent. Wholesale prices came in even lighter on Thursday. In a normal year, matching forecasts would be a shrug. This year the market's fear has run toward a rate increase, not a cut, ever since the Fed held rates at 3.50 to 3.75 percent in July with three members voting to hike. So a boring inflation report counted as genuinely good news.

Friday complicated it. Retail sales fell 0.6 percent in July against an expected gain, the steepest monthly drop in more than a year, and the weakness held even after setting aside gas stations and car dealers. The University of Michigan's early August sentiment reading fell to 51, near the lowest levels in the survey's seventy-year history, and only 8 percent of households now expect their income to outrun inflation. Put the month together: jobs shrank, prices behaved, and the consumer pulled back. Markets read all of that one way. The implied odds of a September rate increase have fallen from 67 percent at the end of July to about one in three today. One in three is not zero, and several Fed officials spent the week saying so. But the direction is hard to miss.

Earnings season is winding down with second-quarter results well ahead of what analysts expected in the spring, and technology carried the week again. Thursday's record close came on the back of the big AI names.

The Strait of Hormuz story turned tense again. Two tankers were attacked Thursday night, Washington said its naval blockade of Iranian ports could continue indefinitely, and Tehran says the blockade must lift before shipping returns to normal. Oil rose to $81.18, up about 4 percent on the week. Energy remains the main reason headline inflation sits a full point above core.

Records and worries arrived in the same week. That is how markets usually work, and it is why your plan does not lean on either headline. We continue to advise staying disciplined within your investment policy and letting September's meeting come to you, not the other way around.

“Investing should be more like watching paint dry or watching grass grow. If you want excitement, take $800 and go to Las Vegas.”

Capital at Work is our weekly letter on what the markets did and what it means, written so you can repeat it at your own table. It arrives by email every Monday morning.

Sources  Market data: J.P. Morgan Asset Management, Weekly Market Recap, Market Insights, U.S., August 17, 2026, reflecting market levels through August 14, 2026. Inflation data: U.S. Bureau of Labor Statistics, Consumer Price Index, August 12, 2026. Retail sales: U.S. Census Bureau, August 14, 2026. Consumer sentiment: University of Michigan Surveys of Consumers, preliminary August reading, August 14, 2026. Rate probabilities: CME FedWatch, as reported August 7 through 13, 2026. NDS Wealth Advisors believes these sources are reliable but cannot guarantee the accuracy or completeness of third-party data and assumes no liability for errors or omissions.

Disclosures  This material is for informational and educational purposes only and should not be relied upon as investment, legal, or tax advice, or a recommendation of any particular security, strategy, or investment product. Any economic forecasts or market outlooks expressed herein are forward-looking statements, subject to change without notice, and may not materialize. Investors cannot invest directly in an index. Index returns do not reflect the deduction of fees, commissions, or expenses, which would reduce overall performance. Past performance does not guarantee future results. Diversification does not guarantee investment returns and does not eliminate the risk of loss. This material does not consider the investment objectives, financial situation, or unique needs of any individual investor. Consult your financial advisor before making any investment decisions.