Last week’s trading stunned many observers as markets vaulted higher after a sharp sell-off in late July. The S&P 500, tracked by the SPY ETF, rose 2.49% for the week, while the Dow Jones Industrial Average, mirrored by DIA, also advanced 1.42%. The Nasdaq Composite, via QQQ, led the charge with gains surging 3.73%. Broadly speaking, volatility that had spiked on renewed tariff concerns gave way to calmer waters as market participants digested stronger-than-expected earnings and growing odds of Federal Reserve rate cuts later this year.

Earnings season continued to underpin the rally. Corporate profits broadly surprised to the upside, helping offset lingering worries about elevated valuations. Technology names remained at the forefront, fueling the Nasdaq’s outperformance. Meanwhile, Fed speakers tilted toward a dovish stance, reinforcing the narrative that policy easing may be on the horizon.

As we head into the week, attention will turn to Tuesday’s Consumer Price Index for July, Thursday’s Producer Price Index, and Friday’s retail sales report. These releases will be key in determining whether the market’s renewed optimism over lower interest rates and resilient corporate earnings can sustain the current upswing.

📅 Tuesday, Aug 12th

• Core CPI m/m & y/y: Core CPI, which leaves out food and energy prices, is expected to rise 0.3% in August after a 0.2% increase in July. That would be the biggest monthly jump since February and would push the yearly rate to about 3.0%. Market participants and policymakers will be paying close attention to core services, especially housing costs like rent and owners’ equivalent rent, which together make up about 40% of core inflation. These housing costs slowed to a 0.2% increase in June, but if they start rising faster again, it could make the Federal Reserve more cautious about cutting rates. Right now, markets see about an 88% chance of a quarter-point rate cut in September, but a hotter core reading could lower those odds and give the U.S. dollar a boost.

• CPI m/m & y/y: The overall CPI report is expected to show prices up 0.2% in July, down from June’s 0.3%, pointing to a small slowdown in monthly inflation. Year-over-year, inflation is forecast to tick up slightly to 2.8% from June’s 2.7%, showing that price pressures are still lingering despite the softer monthly pace. Some of this is tied to tariffs, with June data showing household furnishings up 1.0% and clothing up 0.4%, along with gains in some electronics-related products. Even though the Fed’s 2% inflation goal is based on a different measure called the PCE index, which usually runs a bit lower than CPI, this report will still be closely watched for what it says about the path of inflation.

📅 Thursday, Aug 14th

• Core PPI m/m: The upcoming Core Producer Price Index report carries significant weight given the previous month’s reading of 0.0% and consensus forecast of 0.2% month-over-month growth. Market participants should closely monitor this 0.2 percentage point differential between the flat June reading and upcoming expectations, as it represents the largest anticipated monthly increase since February 2025, when Core PPI jumped 0.3%. The key metrics to watch include not only the headline month-over-month figure but also the year-over-year reading, which is expected to remain stable at 2.6% after declining from 3.2% in May to 2.6% in June, indicating continued moderation in producer-level inflation pressures.

• PPI m/m: The upcoming reading is forecast at 0.2% following a flat 0.0% print in July, reflecting modest upward pressure on wholesale prices. Traders should monitor core PPI, which strips out volatile food and energy components, as well as sector breakdowns, especially services versus goods, to gauge underlying inflation trends. Investors will also watch for any upside surprise that could signal renewed price pressures and influence Federal Reserve rate expectations.

• Unemployment Claims: The US weekly unemployment claims report is scheduled for release, with the prior reading at 226,000 claims and the consensus forecast expecting a decline to 220,000 claims. Market participants should monitor whether the actual figure comes in below the 220,000 forecast, which would signal continued labor market stability, or above 226,000, indicating potential softening in employment conditions. Key market reaction areas will include equity markets facing downward pressure on weak data, and the US dollar potentially weakening against major currencies.
  
  Additionally, traders should watch for any revisions to the previous week’s 226,000 figure and consider the broader context of continuing claims, which recently hit 1.97 million, the highest level since November 2021, suggesting unemployed individuals are taking longer to find new employment.

📅 Friday, Aug 15th

• Core Retail Sales m/m: The upcoming report shows an expected deceleration in consumer spending growth with a consensus forecast of 0.3% compared to the prior month’s stronger print of 0.5%. This metric excludes volatile categories like automobiles and gasoline, making it a more reliable gauge of underlying consumer spending trends that directly contribute to GDP calculations.
  
  A reading below the 0.3% forecast could signal weakening consumer confidence and prompt bond yields to decline as markets price in potential Fed rate cuts, while simultaneously pressuring the US dollar and consumer-discretionary sectors. Conversely, a stronger-than-expected print above 0.3% would likely boost Treasury yields and support dollar strength, as it would reinforce the Fed’s cautious approach to monetary easing amid persistent economic resilience.

• Retail Sales m/m: The upcoming July retail sales report, is expected to show a 0.5% month-over-month increase, slightly below June’s 0.6% gain. A key category to watch is motor vehicles and parts, which jumped 1.2% in June after two months of declines, as any moderation could weigh on the headline figure. Gasoline station sales, which make up about 7% of total retail sales, will also be in focus given recent swings in fuel prices that can significantly influence the overall number. Restaurant and bar receipts, which rose 0.6% in June, will be closely monitored for signs of shifts in discretionary consumer spending, as continued strength could indicate resilient demand while weakness might suggest a more cautious household sector.

• Prelim UoM Consumer Sentiment: The preliminary University of Michigan Consumer Sentiment index is expected to rise to 62.2 from last month’s 61.7, indicating a modest improvement in household outlook on economic conditions. Market participants should monitor the divergence between the current conditions and expectations subcomponents, particularly any unexpected weakness in the expectations gauge, which could signal waning confidence in future spending. Traders may also watch for volatility in U.S. Treasury yields and the U.S. dollar reaction immediately after the release, as a stronger-than-forecast reading could prompt bond sell-offs and dollar strength.

• Prelim UoM Inflation Expectations: The University of Michigan’s preliminary one-year inflation expectations for July fell to 4.5% from 5.0% in June, marking a notable decline. A reading above consensus could heighten concerns about persistent inflation, potentially pushing U.S. Treasury yields higher and strengthening the dollar. On the other hand, a softer figure could boost risk assets and lower expectations for further Fed tightening. The five-year inflation outlook also dropped to 3.4% in July, its lowest since January, suggesting greater confidence in longer-term inflation stability.

💼 Here are some companies set to report earnings this week:

📅 Wednesday, Aug 13th

• Cisco Systems, Inc. (CSCO): Cisco is set to announce Q4 FY25 results, with analysts projecting EPS of $0.98, up 12.6% year-over-year, on revenue of $14.6 billion, a 7.1% increase. Management’s guidance will be closely watched for insights into macro demand and tariff impacts. Market participants should focus on segment trends, particularly security product revenue of about $2.20 billion (+23% YoY) and services revenue of roughly $3.88 billion (+2.6% YoY), along with any commentary on AI-infrastructure order momentum.

📅 Thursday, Aug 14th

• Deere & Company (DE): Deere & Company will report Q3 2025 earnings, with analysts expecting EPS of $4.58 and revenue of about $10.35 billion. In Q2, the company posted adjusted EPS of $6.64 on revenue of $11.17 billion, driven by resilient margins despite a 17.9% year-over-year sales decline. Market participants should focus on management’s updated full-year net income outlook of $4.75 billion to $5.50 billion, segment operating margins, and order backlogs in the Production & Precision Agriculture (P&PA) business.

• Applied Materials, Inc. (AMAT): Applied Materials will report Q3 2025 earnings, with analysts forecasting revenue of about $7.22 billion and EPS of $2.36, while the company’s own guidance calls for $6.70–7.70 billion in revenue and $2.15–2.55 EPS for the period. Investors should focus on how actual top-line and bottom-line results stack up against both consensus and guided ranges, and closely watch order momentum in the Semiconductor Systems backlog. Traders will also be tracking margin trends, impacted by raw-material and R&D costs, as well as any commentary on China exposure, which represented roughly 25% of Applied Materials’ revenue in Q2 before export restrictions took hold.

• Advance Auto Parts Inc. (AAP): Advance Auto Parts is scheduled to release its Q2 FY2025, with analysts forecasting $0.56 EPS on roughly $2.0 billion in revenue, a 25% and 26% annual decline, respectively. Market participants should track comparable-store sales momentum, particularly Pro channel resilience versus the DIY segment, and monitor gross margin trends under tariff-driven cost pressures. Investors will also be watching for any revisions to full-year guidance, currently $8.4–8.6 billion in net sales and $1.50–$2.50 in adjusted EPS, which will signal management’s confidence in its turnaround and financing strategy.

We hope this helps and happy trading!

– Trade and Travel Team