T&Q Morning Briefing

Friday closed out with a mixed picture across U.S. equities. The Dow rode a sharp 12% pop in UNH, fueled by Berkshire and other marquee investors upping their stakes, to another record, but the S&P 500 and Nasdaq mostly marked time as options expiration kept volumes choppy. For the week, though, gains were broad: small-caps up roughly 3%, health care the surprise leader, and the Mag 7 keeping large-cap tech well bid despite a stumble in semis after weak AMAT guidance.

Economic data added to the noise. Retail sales beat expectations, lifted by Prime Day and copycat promotions, while industrial output slipped slightly. The University of Michigan’s sentiment index, however, fell sharply, reflecting rising unease about inflation and the job market. On the inflation front, CPI came in tame, PPI ran hot, and import prices ticked higher, leaving traders debating whether July was an outlier or a harbinger of something stickier. Treasury yields climbed into the weekend, the 10-year pushing back toward 4.33%, while Bitcoin, which had tagged record highs midweek, slid back under $118K.

The week ahead has one obvious focal point: the Fed’s Jackson Hole symposium. With futures still pricing a roughly 95% chance of a September cut, the question is whether Powell uses Friday’s keynote to temper those expectations after last week’s inflation flare. Treasury Secretary Bessent is still lobbying for a bold 50-basis-point move, but Fed officials like Daly continue to warn against rushing. Investors will parse every word for clues.

There’s a palpable tension in equity markets: on one hand, earnings season has been solid enough to calm fears of an imminent slowdown. Big-box retailers report this week, giving investors the clearest lens yet into the consumer, just as inflation jitters resurface. The Mag 7 continues to pull much of the market’s weight, raising questions about concentration risks. According to recent estimates, the top 10 stocks now make up a record 40% of the S&P’s market cap, a dynamic that looks great when they’re rising, but could turn fast if leadership falters.

Meanwhile, sectors like health care and communications have surprised to the upside, while real estate and utilities remain under pressure from higher yields. Traders are still plowing into homebuilders on the rate-cut narrative, but with Powell on deck, some worry Jackson Hole could be the moment those bets get checked.

Geopolitics step squarely into the foreground this week. Trump and Putin met in Alaska over the weekend, with Washington casting the summit as a chance to push toward a Ukraine ceasefire. Putin’s demands, however, remain steep, and U.S. allies are pressing Trump not to back away from Kyiv too quickly. The talks have also carried knock-on implications for energy markets. Oil slipped into the weekend on hopes of progress, but analysts caution that even if there’s movement on Ukraine, it won’t automatically unlock a flood of Russian barrels.

Over in Asia, China’s economy is showing fresh signs of strain. Retail sales and industrial output both missed forecasts, raising the specter of slowing domestic momentum just as tariffs bite harder. That weakness could ripple outward, with global supply chains and commodity demand already showing stress. At the same time, Washington is sharpening its focus on China’s tech edge, particularly in open-source AI, where Beijing appears to be pulling ahead.

Back at home, the political calendar is running just as hot. Trump is weighing the optics of the Alaska summit while his economic team debates how hard to lean on the Fed for cuts. Treasury’s call for an aggressive 150 basis points of easing this year sits uneasily with some Fed regional presidents, who argue fundamentals don’t justify it. Meanwhile, Democrats in the Senate are sounding alarms over advanced AI chip exports to China, underscoring how bipartisan consensus on tech competition continues to harden.

Closer to the ground, the administration is also facing rising questions about security and policing, with the National Guard stepping in to reinforce D.C. amid staffing challenges in the local police force. It’s another reminder that domestic stability issues are never far from the surface, even as global diplomacy grabs headlines.

NAHB Housing Market Index

Palo Alto Networks (PANW)

 Asia: Nikkei 0.77%, Shanghai 0.85%
Europe: FTSE -0.08%, DAX -0.34%

Markets head into the week with a strange mix of calm and unease. Earnings have helped, consumer spending looks resilient in parts, and the Mag 7 remains an anchor. But inflation is still humming, sentiment is on-edge, and the Fed is about to take center stage in Jackson Hole. If Powell blinks toward the doves, equities could keep marching ahead. If not, a market priced for cuts may need to rethink. Either way, the next few days set the tone for the rest of summer trading.