Wall Street’s focus has shifted from labor data to inflation, with markets now watching whether this week’s price reports can support current rate pricing after a sharp rally in US equities.
Chaoxiang Research said the key new variables over the weekend were talks related to the Strait of Hormuz, Berkshire Hathaway’s capital allocation moves, and US government funding.
Tech stocks led the rebound, but sector and single-name moves remained uneven
The S&P 500 rose 0.62% on Friday to 7,757.64 and gained 3.58% for the week. The Dow Jones Industrial Average added 0.28% to 54,036.93, up 2.96% on the week. The Nasdaq climbed 1.30% to 26,690.62 and advanced 5.19% for the week. The S&P 500 and the Dow both set closing records.
Using market-cap weighting across S&P 500 components, consumer discretionary rose 1.50%, materials gained 1.46%, and information technology added 1.33%. Health care, utilities and real estate posted modest gains. Industrials were little changed, while consumer staples, financials, communication services and energy fell. Energy was the weakest group, down 1.15%.
Single-stock performance continued to track earnings and guidance. SpaceX rose 15.8%, bringing its two-day gain after lockup expiration to more than 20%. Coherent gained more than 40% for the week on support from optical communications orders and data-center revenue. Trade Desk fell 21.9% after revenue guidance came in below expectations.
In cross-asset trading, the VIX fell 1.65% to 14.90. The US 10-year Treasury yield stood at 4.645%, while the two-year yield was 4.195%. WTI crude settled at $78.18, down 7.66% for the week, and Brent crude finished at $83.55, down 4.98%. Spot gold was $4,339.75, up 7.27% for the week. As of Sunday, Bitcoin traded at $64,856 and Ether at $1,908.94.
Strait of Hormuz talks are still missing execution details, putting oil back at the center of pricing
Discussions between Iran and Oman on shipping arrangements for the Strait of Hormuz were said to be close to completion, but a formal reopening remains tied to conditions including sanctions relief, asset unfreezing, an end to military threats, and compensation for losses. The US and Iran are still communicating through intermediaries, and the sequence for implementation has not been settled.
Over the weekend, Houthi forces again attacked Saudi Aramco’s Jazan refinery, keeping pressure on energy infrastructure and shipping security in the Gulf. In Asian trading on Monday, Brent moved back above $84 and WTI approached $79.
The report said last week’s oil decline was largely a trade on expectations that shipping would resume, but weekend developments did not confirm that commercial navigation could recover quickly. Strait management arrangements, the lifting of US restrictions, and the return of ship insurance still need to move separately. If oil extends its rebound, inflation expectations, Treasury yields and technology valuations could all come back under pressure.
Berkshire begins to deploy cash as shutdown risk is pushed back for now
Berkshire Hathaway posted a 16% year-over-year increase in second-quarter operating profit to $12.98 billion, while net profit rose to $25.67 billion. The company repurchased $4.5 billion of its own stock in the second quarter and about $3.3 billion more in July. It also ended a streak of 14 consecutive quarters as a net seller of equities, with net stock purchases of nearly $20 billion in the quarter.
Berkshire also spent about $10 billion increasing its stake in Alphabet, lifting it into the company’s top five holdings. Cash reserves fell from $380.2 billion in the previous quarter to $364.7 billion. After Greg Abel took over as chief executive, stock buying, share repurchases and acquisitions of operating businesses all increased, shifting more of the valuation debate toward capital-use efficiency.
The US Senate passed a temporary funding bill that would keep most federal agencies financed through Dec. 11. The Senate version still needs to be aligned with the House plan, but the near-term probability of a government shutdown has fallen and fiscal negotiations have been delayed until after the midterm elections.
Separately, Apple’s China website briefly displayed instructions over the weekend indicating Apple Intelligence could connect to Alibaba’s Qwen. The page was later removed, and Apple did not explain the change. The launch timing for Apple Intelligence in China is still awaiting official confirmation.
This week’s calendar is centered on inflation, retail sales and AI earnings
There are no major US economic releases on Monday, leaving markets to absorb the rebound in oil and Berkshire’s results. Rocket Lab is due to report after the close, with investors watching commercial launch progress, backlog and spending on its next-generation rocket.
On Tuesday, CoreWeave and Lumentum are scheduled to report. CoreWeave is expected to update investors on AI cloud demand, capital spending and financing costs. Lumentum’s revenue guidance will be watched as a test of whether demand in optical communications is holding up. The optical interconnect group rallied sharply last week, so earnings will need to match the valuation move.
On Wednesday, the US will release July CPI. The market expects headline CPI to rise 3.4% year over year and core CPI to increase 2.5%. Cisco reports after the bell, with enterprise networking demand, AI orders and margins in focus.
On Thursday, the US will publish July PPI and weekly jobless claims, while Applied Materials reports after the close. Investors will watch semiconductor equipment orders, HBM-related investment, advanced logic process spending and next-quarter guidance for signals across the equipment and memory supply chain.
On Friday, the US releases July retail sales and the preliminary University of Michigan consumer sentiment reading. Economists expect retail sales to rise 0.2% month over month. That data will help test whether softer employment conditions are beginning to affect household spending.
Payroll weakness reduced the odds of a hike, leaving CPI as the week’s key rates trigger
US nonfarm payrolls fell by 23,000 in July, missing expectations for an 80,000 increase, while May and June payrolls were revised down by a combined 103,000. After the release, the probability of a September rate hike fell to about 44%, and both the two-year Treasury yield and the dollar moved lower, easing valuation pressure on technology shares.
Chaoxiang Research said that if CPI does not exceed expectations, the 10-year Treasury yield could hold near 4.65% or continue to ease, and indexes could still move higher if earnings across the AI supply chain keep growing. If inflation reaccelerates and oil keeps rising, rate trades could reverse quickly. With the S&P 500 already at record highs, the market needs fresh support this week from both inflation data and corporate earnings.
