Stocks Flat, Yields Up Awaiting Retailer Results

Published as of: August 17, 2026, 9:10 a.m. ET

(Monday market open) Major indexes flattened early to start a week featuring earnings from Walmart and minutes from the last Federal Reserve meeting. Oil, yields, and volatility rose, posing possible headwinds with no Iran resolution in sight. Investors also continue to mull Friday's surprise drop in July retail sales, which followed weak jobs data and could suggest consumer caution even as corporate results impress.

One intriguing nugget after the close is the Treasury International Capital report tracking overseas investment in U.S. assets. A weak report might lift yields. Lingering inflation and rising U.S. fiscal deficits continued to push yields up last week despite soft data. "We continue to see risks that Treasury yields could move higher from here," said Cooper Howard, director of fixed income research and strategy at the Schwab Center for Financial Research (SCFR).

On Friday, the S&P 500 Index fell after failing to retest Thursday's record highs, though it posted its third straight weekly gain. The cart gets rolling tomorrow on retail results with Home Depot (HD) before the open. "Big Orange" beat consensus last time, but shares trade below 2026 highs posted when investors anticipated Fed rate cuts. There's now a 64% chance of a hike by year-end, according to the CME FedWatch Tool.

1. Earnings impress, with retailers, Nvidia ahead: With earnings season 90% done, results continue to impress from a market-broadening perspective. In other words, the gains weren't solely from tech giants but embraced every sector besides health care. Most sector earnings rose double-digits, and 87% beat analysts' bottom-line estimates. Though FactSet didn't release its usual weekly earnings estimate Friday, its most recent one penciled in annual growth above 50%. That's swollen by investment gains from a handful of hyperscalers, but excluding that, S&P 500 earnings growth neared 30%, the best performance since right after the pandemic. Earnings aren't over, of course, with retailers ahead. Also, Nvidia (NVDA)—an earnings bellwether—reports August 26. "At the beginning of July and the lead into earnings season, the consensus expectation for the S&P was 24%," noted Liz Ann Sonders, chief investment strategist at SCFR, in her Friday podcast. "And we're now running at 51% and change. We have never seen a parabolic ascent in earnings like we are seeing right now."
    
2. Checking under earnings hood and looking ahead: It's unprecedented to see this kind of earnings surge when the economy isn't emerging from recession. "It's obviously driven a lot by AI and the capital spending associated with that, and the feeders that has into sectors other than just technology and communication services," Sonders noted, including materials, utilities, energy, and industrials. "So that has allowed the improvement in earnings to be somewhat broad." One concern, Sonders added—and it may not be imminent—is that lofty numbers raise the expectations bar. Also, within a few quarters, earnings growth will be measured against the recent meteoric rise, making for tough comparisons. In addition, though earnings growth has been broad, the top 10 contributors represent 65% of the increase in S&P earnings, so concentration remains an issue. Despite Nvidia's report ahead, the recent jump to record highs for the S&P 500 Index mainly reflected a steady flow of hot earnings reports. Without that constant stimulus—and heading into a seasonally weak time of year—the market might need to look elsewhere for catalysts to keep the rally afloat.
    
3. Technicals carry mixed implications: Market breadth continued to improve last week, with 68% of S&P 500 stocks above the 50-day moving average and 73% above the 200-day as of Friday. Also, the Average Directional Index (ADX), which tracks trend strength, is above 20, indicating a stronger trend in place. However, the S&P 500's Relative Strength Index (RSI), which tracks momentum and overbought or oversold conditions, weakened slightly and showed a minor divergence with the rising index, a bearish sign. It's near 70, traditionally the level associated with overbought conditions and one that's posed a headwind on previous approaches the last four months. If the SPX retreats, first support could be near 7,755. Judging from options positioning, there's little appetite to hedge, with upside call buying and put selling continuing in tech names. "The intermediate-term uptrend is intact and the technicals are bullish, but on a very near-term basis, a modest pullback or digestion period wouldn't surprise at some point this week," said Nathan Peterson, director of derivatives research and strategy at SCFR, in his Weekly Trader's Outlook.

• Sandisk (SNDK) rose 4% early Monday following last week's 35% surge. Other memory chip stocks also rose. One tailwind could be Commerce Secretary Howard Lutnick telling Apple (AAPL) not to buy memory chips from China, Barron's reported.
   
• Snap (SNAP) fell 4% early, hurt by last week's court ruling that allowed lawsuits against large social media companies to proceed, Yahoo Finance reported. A large recent insider sale of shares also weighed.
   
• Alibaba (BABA) climbed 2.5% after Reuters reported the company plans to sell its game developer business to a private equity firm for more than $2 billion.
   
• Vista Energy (VIST) climbed more than 5% early as CNBC reported that billionaire Peter Thiel's hedge fund had acquired a stake.
   
• Broadcom (AVGO) took a 6% spill Friday after two investment firms disclosed that they'd either exited the stock or lowered their positions, Briefing.com reported.
   
• Advanced Micro Devices (AMD) rose 6% Friday after a major private investor unveiled a new stock position, Briefing.com said.
   
• Higher U.S. Treasury yields correlate with overseas yield strength in Japan and Europe. Japan's yields rose overnight despite weak economic data as investors continue to anticipate a September rate hike there. Japan's 10-year yield hit 2.93% today, the highest since September 1996.
   
• Six of 11 S&P 500 sectors advanced Friday, but info tech slid, tripped by what appeared to be pre-weekend profit taking. Tech is up 4.4% over the last month, behind only energy and health care over that period.
   
• The Russell 2000^® (RUT) small-cap index closed higher for the fourth day in a row Friday.
   
• Defensive sectors like utilities, staples, and real estate gained Friday and generally outperformed growth sectors over the last five sessions. This could indicate caution as earnings season winds down and the seasonally weakest time of year approaches.
   
• The Cboe Volatility Index (VIX) shows little sign of hedging activity picking up, posting new lows for 2026 Friday below 14.30. However, VIX popped 4% this morning even as major indexes edged up. This could represent a headwind for stocks.
   
• The Atlanta Fed's third quarter GDPNow estimate fell sharply to 4.3% Friday after retail sales. This estimate is a so-called "now-cast," meaning it's constantly shaped by fresh data and could change dramatically before government estimates arrive in October.

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Last week, CME crude oil futures (/CL—candlesticks) rose slightly, finishing once again above the 50-day moving average (blue line). This appeared to lift the 10-year Treasury yield (TNX:CGI—purple line), as yields have echoed crude over the course of the last three months.