Market Recap - Week of August 10 - 14, 2026

Gordon Achtermann
6 days ago
3 min read

The S&P 500 index rose 0.4% this week after inflation reports were down, and an unexpected drop in retail sales boosted the odds of a sixth straight monetary policy pause in September.

The market benchmark ended the week at 7,785.76, just off the latest all-time high set on Thursday. The index is now up 3.8% quarter-to-date and 14% this year.

The probability of the Federal Reserve extending its policy pause next month jumped after July's consumer and wholesale price inflation rates, both headline and core, declined, and retail sales for the month unexpectedly slumped the most since May 2025. There's now a 67% chance that the Fed will leave interest rates unchanged, up from 56% a week ago, according to the CME FedWatch tool.

The energy sector in the S&P 500 had the largest percentage gain of the week, up 7.3%, followed by a 1.5% advance in utilities and 1% increases for both consumer staples and health care. Financials, industrials, and real estate also rose week to week. All of these sectors benefit from the ongoing rotation away from growth stocks as an economic slowdown looks increasingly likely.

Last Week's Economic Reports

The all-in Consumer Price Index (CPI) rose 3.4%, and core CPI (excludes food & energy) was up 2.5% y/y. However, in my opinion, rising food prices are unlikely to abate soon, with fertilizer supplies constricted by Trump's war of choice and farm labor shortages due to immigration policies.
The Producer Price Index (PPI) was flat m/m.

Up Next

Economic data due next week includes the July minutes of the Federal Open Market Committee meeting, S&P Global manufacturing and services purchasing managers' indexes, industrial production, building permits and housing starts. The climb in the 30-year mortgage rate (up 0.5% to 6.76% YTD) may foreshadow disappointing housing numbers to come.

S&P 500 Stylebox and Sector Returns

Once again, I'll note that so far this year, value has outperformed growth across the board, and it's not even close for large or midsize companies.

How to read the stylebox: The horizontal axis represents investment style, which can be value, blend, or growth for stocks and mutual funds. The vertical axis represents stock market capitalization, categorized by company size as large, medium, and small. The number in each box represents the category's percentage growth at the intersection of the column and row. For example, large-cap value is in the top-left corner box of the 9 boxes, so the large-cap value category is up (or down) by the percentage shown in that box. The stylebox is NOT the S&P 500; it's the whole US stock market.

Thought of the Week

It is becoming more difficult for investors to find ways to diversify away from AI exposure as it commands a growing share of public and private markets. Hyperscalers, with a seemingly never-ending appetite for fresh capital, have tapped nearly every corner of the capital markets–raising both equity and debt–to fund the AI capex buildout. As a result, market concentration in the tech sector, increasingly tied to AI, has risen with no signs of slowing. According to J.P. Morgan Global Research, the cumulative price tag for the buildout is expected to reach $ 5.5 trillion by 2030, suggesting that elevated concentration in tech could persist for years. This could leave portfolios acutely exposed to heightened bouts of volatility if challenges arise. Potential challenges include slower AI adoption, delays in upgrading the electrical grid to power data centers or AI companies missing earnings forecasts.

With so much money pouring into a single concentrated theme, many investors are left wondering, “Where can I turn for true diversification?” While it may be getting harder to find, underappreciated areas across public and private markets can still provide diversification benefits. In public markets, investing internationally in developed market equities, where the tech sector accounts for only ~15% of the benchmark, can limit AI exposure. In private markets, real assets such as core infrastructure and real estate can provide uncorrelated returns, regardless of whether AI’s promises are ultimately delivered.

Moving forward, as AI’s presence across asset classes continues to grow, investors seeking to maintain diversified portfolios will likely need to take a more active approach to limit concentration in this single theme.

Source: JP Morgan (edited)

Thank you to all who attended this month's market Update webinar!

You can watch the replay here:

AI Hedge Fund Blows Up & Japanese Yen Intervention – Monthly Market Update Webinar – August 2026

The episode is also available wherever you listen to podcasts!