The Markets (as of market close August 21, 2026)
Wall Street endured a volatile week as stock traders weighed rising Treasury yields, elevated oil prices, geopolitical uncertainty, and questions surrounding the path of interest rates. Although stocks rallied on Friday, the major U.S. indexes finished the week lower. Bond-market volatility was a significant driver of investor sentiment, with the 30-year Treasury yield reaching its highest level since 2007 during the week, and the 10-year yield also climbing to multiyear highs.
Technology shares were among the hardest hit as higher borrowing costs weighed on growth-oriented stocks, while concerns surrounding valuations and artificial intelligence spending added pressure to semiconductor companies. Consumer stocks also faced headwinds following disappointing retail earnings. Materials led the S&P 500 sectors higher during Friday’s rebound, while utilities lagged.
Energy markets remained another source of uncertainty. Oil prices rose during the week as tensions surrounding Iran and the Strait of Hormuz persisted, adding to concerns that higher energy costs could keep inflation elevated. Meanwhile, gold climbed to a more than three-month high and posted its third consecutive weekly gain, supported by a weaker U.S. dollar and continued demand for alternative assets amid bond-market volatility.
Last Week’s Economic News
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Housing construction weakened in July. Housing and single-family housing starts declined for the month. Housing completions also fell.
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Building permits provided a more encouraging signal for future construction, rising in July to an annual rate of 1.443 million. Permits were also higher than a year earlier, while single-family permits increased as well in June.
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Industrial production continued to expand modestly. Total industrial production increased slightly in July after rising similarly in June and stood above its level from July 2025. Manufacturing, mining, capacity utilization, and utilities production all rose.
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The service sector showed significant strength in August. The preliminary S&P Global U.S. Services PMI jumped up in July, its highest level in 20 months. The broader Composite PMI also increased, signaling the fastest overall private-sector growth since April 2022.
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Manufacturing remained in expansion territory but lost some momentum. The preliminary S&P Global Manufacturing PMI slipped to in August from July. Despite the slowdown in manufacturing, stronger services activity helped push overall business activity higher. Encouragingly, the survey also indicated that selling-price inflation moderated during August.
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The latest economic data presented a mixed picture for investors. Stronger service-sector activity and continued industrial growth pointed to underlying economic resilience, while the sharp decline in housing starts and continued pressure from elevated energy prices highlighted areas of weakness. The combination of resilient growth and lingering inflation concerns contributed to continued uncertainty surrounding the Federal Reserve’s next move.
Eye on the Week Ahead
Stock market watchers have a busy week ahead. New home sales, consumer confidence, and home-price data are scheduled for release, followed by July durable goods orders and the second estimate of second-quarter gross domestic product. The week’s most closely watched economic data will include personal income and spending and the Personal Consumption Expenditures (PCE) price index, an important measure of inflation for the Federal Reserve.
Markets will also be watching NVIDIA’s quarterly earnings for another indication of the strength of AI-related investment and technology spending. The week culminates with the Federal Reserve’s Jackson Hole symposium, where Fed Chair Kevin Warsh’s remarks will be closely scrutinized for clues about the direction of monetary policy following the recent rise in Treasury yields and continued inflation concerns.
Have a nice week!
Sincerely,
Robert G. Carpenter