S&P 500 Hits New High on Delayed and Reduced Rate Hike Expectations

The S&P 500 (Index: SPX) reached a new record high close of 7,798.99 on Thursday, 13 August 2026 before falling back on Friday to end the trading week at 7,785.76.

Two developments helped to spur the index to its new heights. First, investors received good inflation news on Wednesday, 12 August 2026 when the Consumer Price Index came in lower than expected. The second came on Thursday, when the Producer Price Index was likewise reported to be lower than expected.

Because of these benign consumer and producer price inflation reports, the CME Group’s FedWatch Tool no longer anticipates the Fed will act to hike the Federal Funds Rate from its current target range of 3.50-3.75% in September 2026, but will instead delay a quarter point rate hike to take place sometime in the fourth quarter of 2026. In its latest snapshot, the FedWatch Tool sees a falling 53% chance the Fed will act to hike this core interest rate to a target range of 3.75-4.00% on 28 October (2026-Q4) but gives a more solid 93% chance this rate will be in effect on 9 December (2026-Q4).

With the next rate hike likely delayed and fewer rate hikes on the table as a result of the better than expected inflation reports, the resulting lower interest rates kept investors focused on the first quarter of 2027 as they set current day stock prices. The latest update of the alternative futures chart shows the level of stock prices is right where they dividend futures-based model forecasts it would be provided investors are focused on 2027-Q1.

While those were the biggest headlines, other things happened that contributed to the random onset of new information investors absorbed and reacted to during the week that was. Here is our summary of the week’s market moving headlines:

Monday, 10 August 2026

• Signs and portents for the U.S. economy:

• July US container imports hit fourth-highest on record, Descartes says
• Oil climbs 5% as Iran, US both demand compensation and Hormuz hopes fade

• Oil in U.S. Strategic Petroleum Reserve falls below 300 million barrels, lowest since 1983

Lower inflation, global ambitions developing in China:

• China July factory-gate inflation eases to 3-month low, CPI slows
• China’s central bank vows to expand yuan’s international use in five-year plan
• China bypasses shipping chokepoints with ‘Ice Silk Road’ through Arctic

Bigger trouble developing in Japan as BOJ minions plan next rate hikes:

• BOJ’s rate-hike path runs into Takaichi’s bond market problems
• BOJ’s debate on faster hikes bolsters September rate move odds

Bigger trouble developing in Eurozone:

• German trade deficit with China grows as Beijing relies less on European industry

Wall Street concluded moderately lower as hopes for Hormuz reopening fade

• Wall Street ends down as expectations of Hormuz deal fade
• Market breadth strengthens: Equal-weight S&P 500 pulls ahead of market-weight index
• Meta to open source its most powerful AI model as it takes swipe at OpenAI, Anthropic

• Microsoft plans to unveil next-generation AI chip in September, The Information reports

Tuesday, 11 August 2026

• Signs and portents for the U.S. economy:

• US court rules Meta, other tech firms must face thousands of lawsuits over social media addiction
• US existing home sales fall further; small business sentiment at 11-month high
• Oil prices settle up as Iran says Strait of Hormuz to stay shut

• U.S. oil tops $84 as Hormuz deal hopes dwindle and deadlock deepens

US auto loans hit record high in second quarter, New York Fed says

US officials work to close supply chain gaps as foreign investment grows

Fed minions say inflation is their biggest problem:

• Inflation is the biggest problem, Fed’s Goolsbee says
• Atlanta Fed’s Venable: Inflation too high, with prospect of easing dependent on events in Middle East

Bigger trouble, stimulus developing in China:

• China’s car sales extend slide as shift accelerates to overseas markets
• Surge in China’s coal imports may start to taper off

Bigger trouble developing in Japan:

• Yen sinks as effect of US-Japan intervention fades

Wall Street ended lower as eyes remain on the Middle East and upcoming inflation data

• Wall Street ends down as US-Iran peace optimism fades

Wednesday, 12 August 2026

• Signs and portents for the U.S. economy:

• US annual inflation cooled to 3.4% in July

• Headline CPI rises 3.4% in July, slowing from June’s pace
• Rate-Hike Odds Tumble As US Consumer Price Inflation Prints Slowest Since Pre-War

Oil prices edge up as investors weigh US-Iran talks deadlock against lower demand

• OPEC further lowers 2026 global oil demand growth forecast

Mortgage rates finally stop rising, causing demand to trickle back

Before the CPI inflation report: Fed minions say poor Americans are struggling to make ends meet, want to hike their interest rates:

• Boston Fed’s Collins open to interest rate increase in September, FT says

• Poorer Americans are struggling to make ‘ends meet’, top Fed official says

Investors worry leaner Fed guidance may come at a price

After the CPI inflation report:

• Fed expected to leave rates unchanged next month after soft inflation data

Bigger trouble, stimulus developing in China:

• China’s central bank pledges timely new policy rollout

Wall Street finished up in the green after the latest inflation report

• S&P 500 ends higher as CoreWeave results fuel AI optimism

• CoreWeave, Super Micro surge on signs of sustained AI buildout

23 dividend safety stocks beating the S&P 500 this year

Thursday, 13 August 2026

• Signs and portents for the U.S. economy:

• US producer prices unchanged in July, further dimming rate hike odds
• Oil settles down 2% on weak demand outlook, hefty US crude build

One Fed minion notices inflation data doesn’t support rate hikes, other Fed minion is slow on the uptake, while third is flapping in the wind:

• Fed’s Goolsbee says latest inflation data is better
• Fed should raise rates to restrain growth and inflation, Hammack says
• Fed’s Barkin: Still an “open question” if rate hike will be needed to meet inflation target

BOJ minions excited to get inflation data to support their plans to keep hiking Japan’s interest rates:

• Japan’s wholesale inflation stays hot, bolstering odds of September BOJ hike
• Rate hike bets leave yen’s post-intervention gains at BOJ’s mercy

• Japan may see more yen intervention, faster BOJ rate hikes, ex-top FX diplomat says

Wall Street ended on top as the S&P 500 notched a new record high

• S&P 500 notches record-high close as rate-hike worries ease

• S&P 500 hits 27th record high of 2026 — History says more likely ahead

Friday, 14 August 2026

• Signs and portents for the U.S. economy:

• US retail sales post first decline in nine months in July
• Oil set for weekly gains after US threatens indefinite blockade of Iran
• Fed rate hike odds sink further as retail sales, consumer sentiment fall

• US retail sales post first decline in nine months in July

Fed minions expected to sit on hands rather than hike rates in September 2026:

• Cooler inflation data may force Warsh’s divided Fed to hold the line on rates

Bigger trouble developing in and out of China:

• China July bank loans post record contraction as credit demand falters
• Chinese car sales are booming almost everywhere – just not at home

BOJ minions getting super excited to hike Japan’s interest rates again:

• BOJ eyeing September rate hike, faster pace of tightening, sources say

Central bank minions around globe betting big on gold:

• Central banks spearhead renewed gold rush

Wall Street ended lower a day after the S&P 500 notched a record high

• S&P 500 ends lower as investors weigh data, Middle East tensions
• S&P 500 posts weekly gain as strength spreads beyond technology

The Atlanta Fed’s GDPNow tool anticipates real GDP growth for the U.S. economy of +4.3% in 2026-Q3, down from the +5.8% annualized growth it forecast a week earlier.

Image credit: Microsoft Copilot Designer. Prompt: “An editorial cartoon of a Wall Street bull and bear who give each other a high-five after news breaks that inflation came in lower than expected while Federal Reserve officials are sad they won’t be able to hike U.S. interest rates when they wanted”.