Last week was another generally positive one for investors, with stocks reaching new highs as several important pieces of the market puzzle moved in a favorable direction.
Perhaps most encouraging was that inflation showed additional signs of cooling without the economy showing broad signs of deterioration. Corporate earnings—particularly within technology and artificial intelligence—remained supportive, while expectations for another Federal Reserve rate hike declined.
Interestingly, stocks themselves only moved modestly higher for the week. But sometimes the underlying evidence matters more than the headline market move.
Inflation remains above the Federal Reserve’s target, long-term interest rates remain stubbornly high, geopolitical uncertainty continues in the Middle East, and recent consumer spending data showed some weakness.
So, despite strong stock prices, this remains an environment where disciplined evaluation of the evidence is especially important.
🔑 Three Market Takeaways from Last Week
📊 1. Inflation Finally Gave Investors Some Better News
Two of the week’s most important reports focused on inflation—and both were encouraging.
The Consumer Price Index showed inflation pressures easing slightly from June, while the Producer Price Index provided additional evidence that price pressures may have peaked earlier this year.
That’s important because inflation has been one of the biggest obstacles preventing the Federal Reserve from becoming more comfortable with interest rates.
Following the reports, expectations for another rate hike declined substantially.
But there is an important distinction: inflation is improving, but it isn’t defeated.
Certain areas of the economy continue to experience elevated price pressures, and inflation remains above the Fed’s long-term target. So, while last week’s reports moved the conversation in the right direction, we’ll want to see that trend continue.
For investors, that’s encouraging progress—not an all-clear signal.
🤖 2. Artificial Intelligence Remains a Powerful Market Driver
The AI story received another boost last week.
Several AI-related companies reported strong results and continued to describe healthy demand for infrastructure spending. That matters because the enormous investment being made in AI has become an increasingly important contributor to corporate earnings and economic activity.
There was also another noteworthy development: additional financing is becoming available to help companies continue building AI infrastructure. In the near term, that’s supportive. It provides additional capital to continue building data centers and purchasing the chips and equipment required to power AI.
But there is another side to the story.
The extraordinary amount of capital required to sustain the AI buildout is something worth watching. If those investments ultimately fail to generate adequate returns, today’s aggressive spending and financing could eventually become a source of risk.
For now, the evidence remains supportive of the AI investment cycle. But this is an area where enthusiasm shouldn’t replace careful monitoring.
📈 3. Interest Rates Aren’t Falling as Much as We Might Expect
One of the more interesting developments last week happened in the bond market.
Inflation data was encouraging. Retail sales were weaker than expected. And expectations for another Federal Reserve rate hike declined.
Normally, that combination would be expected to push longer-term Treasury yields meaningfully lower.
But the 10-year Treasury yield barely moved for the week.
That’s worth our attention.
Shorter-term interest rates have responded more noticeably to changing Fed expectations, while longer-term rates remain elevated. That suggests investors are still concerned about longer-term inflation, government borrowing and other factors affecting the bond market.
This doesn’t mean elevated yields will derail the stock market. But they remain an important potential headwind.
If long-term yields begin declining in an orderly fashion, that could provide additional support for stocks. Conversely, another meaningful move higher could place renewed pressure on market valuations.
🧭 Inside Advance & Protect
Each week we explore one principle behind our Advance & Protect philosophy – and how it helps us navigate today’s markets.
Improving Isn’t the Same as Confirmed
Markets rarely move from clearly negative to clearly positive overnight. More often, the evidence changes gradually.
A trend that had been deteriorating begins to stabilize. Market participation improves. An asset that had been declining begins establishing a new trend. Eventually, enough evidence may accumulate to confirm that conditions have meaningfully changed.
That creates an important challenge for investors.
Do you act because something looks better—or wait until the evidence confirms the change?
Our Advance & Protect philosophy is built around the latter.
Waiting for confirmation means we won’t always capture the very beginning of every market move. That’s intentional.
Trying to anticipate every turning point requires making predictions. A disciplined process instead establishes objective criteria and allows the evidence to determine when conditions have changed enough to warrant action.
This can be particularly important during volatile markets because headlines and short-term price movements can make almost any trend appear convincing for a few days.
The goal isn’t to react first. The goal is to respond consistently when the evidence supports doing so.
Advance & Protect Insight: Improving conditions deserve attention. Confirmed conditions deserve action. Having a disciplined process helps distinguish between the two.
👀 What We’re Watching This Week
📊 Economic Growth
After last week’s inflation reports, attention shifts back toward economic growth.
Several reports this week will provide early indications of how the economy is performing in August, culminating with Friday’s preliminary PMI reports on manufacturing and services.
Ideally, we’d like to see continued economic growth without a renewed acceleration in inflation.
🏦 Federal Reserve Minutes
Wednesday’s Federal Reserve meeting minutes could provide additional clues about how policymakers are thinking about inflation and future interest-rate decisions.
With expectations for another rate hike having declined following last week’s inflation data, investors will be looking closely for signs of how divided Fed officials remain.
🛍️ The Consumer
Friday’s weaker-than-expected Retail Sales report followed the previous week’s disappointing employment report.
Neither report alone signals that the economy is entering trouble, especially because many other indicators remain healthy.
But two softer readings make upcoming growth data more important. We’ll be watching to see whether recent weakness is isolated or beginning to develop into a broader trend.
📈 Treasury Yields
Long-term Treasury yields remain one of our most important market indicators.
Despite several developments that normally would have pushed yields lower, the 10-year Treasury yield remains elevated. We’ll continue watching closely to see whether rates finally begin responding to cooling inflation—or resume moving higher.
🧭 Final Thoughts
Strong stock levels naturally attract attention. But the level of the market isn’t nearly as important to us as the evidence supporting it.
Last week provided several encouraging developments. Inflation showed signs of improvement. Corporate earnings remained supportive. AI investment continued. And expectations for additional Federal Reserve tightening declined.
At the same time, long-term interest rates remain elevated, geopolitical uncertainty hasn’t disappeared, and we’re beginning to see some softer economic readings.
None of those developments require us to predict what happens next.
Instead, they reinforce why we believe in maintaining a disciplined investment process.
Markets can change. When the evidence changes enough, our positioning can change with it. Until then, we continue to follow the process.
Ready to Explore Advance & Protect?
Every investor’s financial situation—and every financial plan—is unique.
If you’d like to learn how our Advance & Protect investment philosophy combines disciplined market analysis with comprehensive financial planning, we’d be happy to schedule a complimentary consultation.
Our goal isn’t simply to help clients pursue investment returns. It’s to provide a thoughtful, evidence-based process designed to help them navigate changing markets while remaining focused on their long-term financial goals.
The market will always give investors something to worry about—and something to get excited about. Having a disciplined philosophy can help prevent either emotion from becoming the investment strategy.
Warm regards,
The Barzideh & Nadeau Wealth Management Team
Thanks for reading! As always, we’re here to help you navigate these markets with confidence and clarity. Stay safe and informed—see you next week.
