🇺🇸: Weekly Market Summary: Review of the week of 2026/08/10

In a nutshell, the US market this week was a week where inflation cooling led to new record highs, but was then braked by slowing consumption, rising oil prices, and overly high expectations for AI stocks.

CPI and PPI were good numbers for the market. The S&P 500 hit an all-time high, and capital flowed back into AI infrastructure stocks.

However, retail sales unexpectedly declined on Friday.
Furthermore, oil prices rose due to tensions surrounding the Strait of Hormuz, and stock prices were pushed back slightly from their highs.

■ Weekly Market Summary

・NY Dow / 53,732.41 / Weekly -0.6%
・S&P 500 / 7,785.76 / Weekly +0.4%
・Nasdaq / 26,729.16 / Weekly +0.1%
・Russell 2000 / 3,068.42 / Weekly +1.1%
・VIX / 14.25
・US 10-Year Treasury Yield / Around 4.70%
・US 2-Year Treasury Yield / Around 4.17%
・Dollar Index DXY / 99.67
・USD/JPY / Around 159.37 yen
・WTI Crude Oil / $82.40
・Brent Crude Oil / $88.52
・Gold Spot / Around $4,380
・Bitcoin / Around $63,000
・AAA National Gasoline Average / Around $4.08 per gallon

■ 1. CPI was quite good. Expectations for a September rate hike receded

・July CPI / Month-on-month +0.1%
・Year-on-year / +3.4%
・Core CPI / Month-on-month +0.2%
・Year-on-year / +2.5%
・Gasoline prices / Month-on-month -2.9%
・September rate hike probability / Dropped significantly after CPI

The CPI, which the market was most wary of, was a relatively mild figure.

In particular, the core CPI year-on-year increase of 2.5% is a source of relief.

Despite the significant movement in oil prices, the ripple effect on consumer prices has been limited so far. In response to this, expectations that the Fed would raise rates at the September FOMC have receded.

However, caution is also necessary.

The July CPI does not fully reflect the subsequent rise in oil prices.

In other words, this CPI was good. But August may not necessarily be good.

I think it is better to consider these separately.

■ 2. PPI was also 0% month-on-month, concerns about re-accelerating inflation have temporarily receded

・July PPI / Month-on-month 0.0%
・Market forecast / +0.2%
・Year-on-year / +4.7%
・June / +5.5%
・Service prices / +0.2%
・Goods prices / -0.7%

PPI was also a weaker figure than expected.

With PPI also settling down following CPI, the view that "the Fed does not need to rush to raise rates" has strengthened.

This is one of the reasons why the S&P 500 hit an all-time high on Thursday.

However, the 4.7% year-on-year figure is still high.

Furthermore, the surge in crude oil prices in late July has not been fully reflected.

This week's inflation indicators were good.
But the inflation problem is not over.

■ 3. S&P 500 at all-time high. Even so, the overall market is not that strong

・S&P 500 / Weekly +0.4%
・Nasdaq / +0.1%
・Russell 2000 / +1.1%
・NY Dow / -0.6%
・S&P 500 / 3 consecutive weeks of gains
・Forward P/E / approx. 20x

The S&P 500 hit a new all-time high on Thursday.

However, looking at the week as a whole, the gain was only about 0.4%. The Nasdaq was also almost flat.

On the other hand, the Russell 2000 rose by more than 1%.

This is a slightly positive change.

It is because capital is moving not only into large-cap AI stocks but also into small-cap stocks.

However, the forward P/E of the S&P 500 has returned to about 20x.

It is by no means a cheap market.

If good news comes out, it hits a new high.
But if slightly bad news comes out, it gets sold off.

I think it is a market with quite high expectations.

■ 4. CoreWeave and Super Micro surge. AI infrastructure demand remains strong

・CoreWeave / Up over 19% at one point
・Super Micro Computer / Up over 13%
・Nebius / +23%
・Dell / +5%
・CoreWeave backlog / $104.2 billion
・Over $25 billion in new contracts this quarter

Demand for AI infrastructure remains strong.

CoreWeave raised its outlook for annual revenue, operating profit, and capital expenditure. Moreover, its computing capacity for the near future is almost sold out.

This is important.

There is a concern that "too many AI data centers are being built."

But at least for now, the demand for computing power is exceeding supply.

Pricing power is also shifting toward CoreWeave.

The momentum of AI investment itself has not stopped yet.

■ 5. Applied Materials sold off despite strong earnings

・Revenue / $9.12 billion
・YoY / +25%
・Adjusted EPS / $3.50
・Exceeded market expectations
・Next quarter revenue guidance / approx. $10.25 billion
・Stock price / Fell about 5% on Friday

This is the scary part of the current AI market.

Revenue is good.
Profits are good.
Guidance is good.

Yet it was sold off.

Since Applied Materials had already risen significantly this year, market expectations were extremely high.

Sometimes, 'Beat & Raise' is no longer enough.

Delivering good earnings is just the baseline.
You must also exceed the market's extremely high expectations.

Semiconductor stocks like Broadcom and Intel were also sold off on Friday.

The AI market is strong.

But expectations have also risen to quite dangerous levels.

■ 6. Retail sales -0.6%, yellow light for US consumption

・July retail sales / MoM -0.6%
・Market expectations / approx. +0.1%
・First decline in 9 months
・Core retail sales / -0.4%
・University of Michigan Consumer Sentiment Index / 51.0
・Market expectations / 54.5

What changed the market sentiment on Friday was the retail sales data.

A 0.6% decrease month-over-month.

There has been a slight change in consumption, which has been supporting the US economy.

Employment is weakening.
Real wages are struggling to grow.
Gasoline prices are over $4.
Mortgage rates are also high.

Even if the stock market is rising, it does not mean that the lives of ordinary households are becoming easier.

However, this is also a bit complicated for the stock market.

Consumption is weak.
The economy is weakening.
It is difficult for the Fed to raise interest rates.

Therefore, it is positive for lower interest rates.

But if consumption truly collapses, it will be negative for corporate profits.

We should be careful about the boundary where 'Bad News is Good News' turns into 'Bad News is Bad News'.

■ 7. The biggest risk is crude oil again. Brent is up about +6% for the week

・Brent Crude / $88.52
・Weekly / approx. +6%
・WTI Crude / $82.40
・Weekly / approx. +5.4%
・Strait of Hormuz / Tanker attacks have resumed
・USA / Warns of prolonged maritime blockade against Iran

The biggest source of anxiety this week is, as expected, crude oil.

Even though CPI and PPI have settled down, if crude oil rises again, it will affect prices from August onwards.

Attacks on tankers have occurred again in the Strait of Hormuz. There is also no progress in peace negotiations between the US and Iran.

Crude oil prices are not just about energy stocks.

Higher crude oil
↓
Higher gasoline
↓
Higher transportation costs
↓
Higher prices
↓
Fed rate hikes
↓
Higher long-term interest rates
↓
Headwinds for high P/E stocks

This trend is the most frightening.

■ 8. Interest rates are showing a somewhat unpleasant pattern of short-term decline and long-term stagnation at high levels

・US 2-year Treasury / around 4.17%
・US 10-year Treasury / around 4.70%
・30-year bond auction yield / highest level in about 25 years
・Probability of no change at September FOMC / approx. 67%

Short-term interest rates fell following the CPI and PPI data.

Yet, the 10-year Treasury yield is around 4.7%.

This is a bit concerning.

The market believes that 'the Fed will not raise interest rates for the time being'.

On the other hand, the long-term bond market is wary of the fiscal deficit, inflation, crude oil, and government bond supply.

In other words, even if the Fed does not raise interest rates, long-term interest rates will not necessarily fall.

For AI stocks, this is important.

If the 10-year Treasury yield heads toward 5%, I think high P/E stocks will face stricter valuations even if their earnings are good.

■ 9. USD/JPY in the 159 range, expectations for a BOJ rate hike in September also rising

・USD/JPY / around 159.37 yen
・Weekly / Yen fell about 1%
・DXY / 99.67
・Japan July Corporate Goods Price Index / +7.2% year-on-year
・BOJ / Expectations for a September rate hike are rising

The yen strengthened to the 156 range due to currency intervention at the end of July, but it has returned to the 159 range again.

The fundamental trend of a weak yen has not changed yet.

Meanwhile, Japan's corporate goods prices are up 7.2% year-on-year.

The weak yen, high crude oil prices, and soaring metal prices are pushing up costs for Japanese companies.

Expectations are also strengthening that the Bank of Japan will raise interest rates further as early as September.

If it exceeds 160 yen, caution regarding further currency intervention is likely to intensify.

■ 10. Gold at $4,380, Bitcoin is somewhat weak

・Gold spot / approx. $4,380
・2 consecutive weeks of gains
・A weaker dollar and receding expectations for rate hikes are tailwinds
・Bitcoin / around $63,000
・Down from around $65,000 at the start of the week

Gold has become strong again.

Inflation indicators have settled, and Fed rate hike expectations have receded. A weaker dollar is also a tailwind.

Furthermore, uncertainty regarding the situation in the Middle East remains.

On the other hand, Bitcoin is not that strong.

Despite expectations of lower interest rates, its upside is heavy.

In the crypto asset market, there is also a retreat in expectations related to regulation, and it has not fully ridden the risk-on sentiment of the stock market.

■ 11. Gasoline prices exceeding $4 are important for assessing U.S. consumption

The national average for regular gasoline according to AAA is approximately $4.08 per gallon.

A month ago it was about $3.86.
The same period last year was about $3.16.

America is a car-dependent society.

Rising gasoline prices have effectively the same impact on households as a tax increase.

Gasoline prices are exceeding $4 just as retail sales are beginning to weaken.

I believe this is quite important for monitoring future personal consumption.

Personal opinion

At first glance, this week was a good one.

CPI has stabilized.
PPI has also stabilized.
Expectations for Fed rate hikes have receded.
The S&P 500 hit an all-time high.
AI data center demand is also strong.

Even so, I remain a bit cautious.

There are three reasons.

Crude oil is rising again.
Long-term interest rates are not falling.
U.S. consumption is starting to weaken.

These are the three.

Furthermore, AI stocks are no longer rising on "good earnings."

Applied Materials is a classic example of this.

AI demand is strong.
Earnings are also good.
Yet the stock price falls.

This is because the stock price has already priced in a significant amount of future growth.

From here on, it is not about "whether AI will grow," but rather,

whether that growth can justify the current stock price.

You need to look at this.

Points to watch for next week

・FOMC Minutes / August 19 / Reasons why 3 members advocated for a rate hike at the July meeting
・Home Depot earnings / Housing market and high-income consumer spending
・Lowe's earnings / Impact of high interest rates on housing-related demand
・Walmart earnings / The biggest indicator for US consumer spending
・Target earnings / Consumption trends of the middle-income segment
・TJX earnings / Is the trend toward frugality strengthening?
・Deere earnings / Agriculture, capital investment, and raw material prices
・Japan GDP / Decision-making factor for the BOJ's September rate hike
・US Housing Starts / Will housing supply increase despite high interest rates?
・US Industrial Production / Confirming the strength of the manufacturing sector
・US 10-year Treasury / Will it head from 4.7% to 5%?
・US 30-year Treasury / Establishing the 5% range
・Crude oil / Will Brent break through $90?
・Strait of Hormuz / Will tanker traffic normalize?
・US and Iran / Presence of progress in peace negotiations
・USD/JPY / Will it break through 160 yen again?
・BOJ / Speculation of a September rate hike
・AI stocks / Will the sell-off in Applied Materials spread to other semiconductors?
・CoreWeave / Can AI demand still be valued after the surge?
・Nvidia / Will expectations rise further ahead of late August earnings?
・VIX / Will the low level of 14 continue?
・AAA gasoline prices / Will the $4 range become established?

Also, the Jackson Hole Symposium is August 27-29.

I think the market will start to become cautious from the latter half of next week.

■ Summary

The US market this week was, 'Record highs due to cooling inflation. But it's still too early to be complacent.'

The S&P 500 is at a record high.

AI demand is strong.

CPI and PPI are also good.

However,

Crude oil is rising.Long-term interest rates are at 4.7%.Retail sales are down.Gasoline is over $4.

Good and bad factors are quite mixed.

What I want to be most careful about going forward is the weakness in the economy.

If employment is only slightly weak, speculation of rate hikes will recede, which is positive for stocks.If consumption is also only slightly weak, it is still positive for interest rates.But if that turns into a full-scale economic slowdown, it's a different story.

Right now, it is still 'bad news is good news.'

When will that change to 'bad news is truly bad news'?

And, to what extent have AI companies' stock prices already priced in future growth?

Precisely because we are at record highs, I don't think there is any need to chase them aggressively.

Look at earnings.Look at cash flow.Look at interest rates.Look at crude oil.Look at exchange rates.And, I will keep cash on hand.

The market is strong, but the stronger the market, the more important risk management becomes.

I write notes for investors.
Except for some analytical articles and earnings-related content, they are published almost entirely for free.