Capital Compass | Weekly Market Update — August 10th, 2026

CAPITAL COMPASS

WEEKLY INVESTMENT NEWSLETTER

Week of August 10, 2026  |  Capital Investment Advisory Services, LLC

The S&P 500 closed at a new record high Friday of 7,757, capping the strongest week for the index since April of this year. The Dow gained 3%, the Nasdaq surged more than 5%, and small-company stocks broke through 3,000 for the first time since 2021. It was a broad, powerful rally that lifted every major index.

Three forces were the primary drivers of last week’s action. First, geopolitical relief. President Trump called off a planned military strike on Iran early in the week, and by Friday the White House was signaling that an Iran ceasefire was imminent. Second, a run of “Goldilocks” economic data: the ISM Manufacturing PMI (Purchasing Managers’ Index — a monthly survey of purchasing managers at factories that measures whether manufacturing activity is expanding or contracting) came in at its strongest reading since 2022, with inflation pressures easing; JOLTS (Job Openings and Labor Turnover Survey — the government’s monthly count of job openings across the economy) and Factory Orders both came in firm but not too hot; and the July jobs report Friday missed expectations meaningfully. Third, generally solid corporate earnings, led by a 17% opening jump in Palantir on blowout results Tuesday.

The combination seemingly pushed back on the September rate hike case that had been building through July. Bond yields fell sharply on the week, oil retreated on both the Iran news and softer demand data, and gold surged on the falling dollar. It was the kind of setup Templeton would recognize: bull markets thrive on relief from things investors were most worried about.

Data sources: Yahoo Finance, CNBC, Reuters, Investing.com, as of August 7, 2026 close. Past performance is not indicative of future results.

A week in which multiple positive forces layered on top of each other. Three developments captured the action:

Corporate earnings also mattered. Palantir was the standout, with shares spiking about 17% at the open Tuesday on blowout second-quarter results that sparked a broad tech rally. Semiconductor stocks staged a powerful comeback, with the iShares Semiconductor ETF (SOXX) rising more than 7% on the week. The one dark spot was some negative mega-cap headlines midweek, including the departure of Alphabet’s lead AI scientist and a disclosure that OpenAI accounted for about 70% of Microsoft’s AI-related sales. Those stories are worth watching as the AI story matures. But they were not enough to derail what became a broadly positive week.

The focus shifts to inflation this week. July’s Consumer Price Index (CPI) lands Tuesday, followed by the Producer Price Index (PPI) on Wednesday. Retail Sales on Friday will give us a fresh read on how the consumer is faring. Earnings season broadens to industrial and consumer names.

Tuesday’s CPI report may be the biggest event of the week. After June’s cooler reading of 3.5% year-over-year, this report will tell us whether the July drop in oil prices has continued to work through the economy, or whether the recent tariff package is starting to show up in consumer prices. A cooler reading would reinforce the Goldilocks narrative that just drove the market to record highs. A hotter reading, particularly on core inflation, could complicate that story quickly.

Retail Sales on Friday will offer an important read on the American consumer, who has been the workhorse of this economy for years now. Economists expect a modest gain of about 0.4%. The earnings calendar broadens out this week with Home Depot, Walmart, Cisco, and Applied Materials all reporting. Walmart in particular will provide a real-time read on middle-income consumer spending, which is what will matter most for the retail sector as we move through the fall.

Sir John Templeton’s observation at the top of this letter has held up for decades because it captures something fundamental about how markets work. Bull markets rarely begin during periods of confidence and comfort. They begin when the news is bad, the outlook is uncertain, and most investors are cautious or outright skeptical. What we have watched over the past several months has been almost a textbook example. In the spring, the Iran war was pushing oil higher. In the early summer, the AI capex story was raising valuation concerns. Two weeks ago, bond yields were spiking on tariff fears and a hawkish Federal Reserve. Each of those worries has now materially eased, and the market has responded with a broad, strong rally to a new all-time high.

It is worth noting where we now stand. The S&P 500 closed the week at 7,757, an all-time high. Nasdaq is up more than 15% on the year. Small-company stocks, which had been the market laggard for years, are up more than 22%. Manufacturing is currently expanding at its fastest pace since 2022. Inflation is cooling. The Iran situation appears to be moving toward another ceasefire attempt. And while a September rate hike remains a live possibility, futures markets moved meaningfully away from expecting one. That is a substantially different backdrop than what we were writing about even a month ago, and it is a reasonable framework for the current rally.

Of course, there are still things to keep an eye on that could impact the narrative. Tuesday’s CPI report could easily disrupt the current calm if inflation surprises to the upside. The Iran ceasefire remains a claim, not a signed agreement. The stagflationary details in ISM Services deserve monitoring. And August and September are historically the two weakest months of the year for stocks, with pullbacks of five to ten percent quite common even in strong years. That is worth mentally preparing for. But the bigger picture is genuinely constructive right now. Templeton would recognize what we are seeing: a bull market that is still climbing its wall of worry, one relief rally at a time.

If you have any questions about your portfolio or what any of this means for your specific situation, please don’t hesitate to reach out to your CIAS Investment Adviser Representative. We are here to help you navigate these markets with confidence.

Edward J. Sabo

Chief Investment Officer

Capital Investment Advisory Services, LLC

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