Written by: Tide Research
Last week, U.S. stocks concluded trading amid a tech stock rebound and adjustments in interest rate expectations, with the three major indices posting their largest weekly gains since mid-April. Weekend variables focused on the Strait of Hormuz negotiations, Berkshire Hathaway's capital allocation, and U.S. government funding. The core issue for this week has shifted to whether inflation data can support the current interest rate pricing.
Tech Stocks Lead Index Rebound, Sector Performance Still Diverges
The S&P 500 rose 0.62% on Friday to 7757.64 points, gaining 3.58% for the week; the Dow Jones increased 0.28% to 54036.93 points, up 2.96% weekly; the Nasdaq climbed 1.30% to 26690.62 points, surging 5.19% for the week. The S&P 500 and Dow Jones hit new closing records.
According to S&P 500 component market capitalization weighting, Consumer Discretionary rose 1.50%, Materials gained 1.46%, Information Technology advanced 1.33%, while Healthcare, Utilities, and Real Estate edged higher; Industrials were flat, Consumer Staples, Financials, Communication Services, and Energy closed lower, with Energy falling 1.15%, performing the weakest.
Individual stocks continued to diverge based on earnings and guidance. SpaceX surged 15.8%, with gains exceeding 20% over two days after the lock-up period expired; Coherent rose over 40% for the week, supported by optical communications orders and data center revenue; The Trade Desk fell 21.9% due to revenue guidance below expectations.
The VIX fell 1.65% to 14.90. The U.S. 10-year Treasury yield was 4.645%, and the two-year yield was 4.195%. WTI crude oil was $78.18, down 7.66% for the week; Brent crude was $83.55, down 4.98% weekly; Spot gold was $4339.75, up 7.27% for the week. As of Sunday, Bitcoin was $64,856, and Ethereum was $1908.94.
Strait Agreement Still Lacks Execution Conditions, Oil Returns to Pricing Center
Discussions between Iran and Oman regarding arrangements for shipping lanes in the Strait of Hormuz are nearing completion, but the formal resumption of navigation remains linked to requirements such as sanctions relief, frozen asset release, cessation of military threats, and compensation. The U.S. and Iran continue to communicate through intermediaries, and the sequence for implementing the agreement has not yet been determined.
Houthi forces attacked Saudi Aramco's Jazan refinery again over the weekend, keeping pressure on energy facilities and shipping security in the Gulf region. During Monday's Asian session, Brent crude rose above $84, and WTI crude approached $79.
Last week's oil price decline mainly traded on expectations of resumed navigation; weekend news did not confirm that commercial shipping could resume quickly. Arrangements for strait management, U.S. lifting of restrictions, and restoration of ship insurance still need to proceed separately. If oil prices rebound consecutively, they will again impact inflation expectations, U.S. Treasury yields, and tech stock valuations.
Berkshire Begins Deploying Cash, Shutdown Pressure Temporarily Pushed Back
Berkshire Hathaway's Q2 operating profit rose 16% year-over-year to $12.98 billion, with net profit increasing to $25.67 billion. The company repurchased $4.5 billion of its own shares in Q2, continued with about $3.3 billion in repurchases in July, and ended a streak of 14 consecutive quarters of net stock sales, with net purchases nearing $20 billion for the quarter.
Berkshire also invested about $10 billion to increase its stake in Alphabet, making it a top-five holding. Cash reserves decreased from $380.2 billion in the previous quarter to $364.7 billion. Since Greg Abel took over as CEO, stock purchases, share buybacks, and physical acquisitions have all increased; discussions about Berkshire's valuation will shift more towards capital efficiency.
The U.S. Senate passed a temporary funding bill, planning to maintain funding for most federal agencies until December 11. The Senate version still needs to be reconciled with the House proposal; the probability of a government shutdown has decreased recently, with fiscal negotiations postponed until after the midterm elections.
Apple's Chinese website briefly displayed usage instructions for Apple Intelligence accessing Ali's Qianwen over the weekend; the relevant page was subsequently removed, and Apple did not disclose the reason for the change. The official launch timeline for Apple Intelligence in the Chinese market still awaits confirmation.
Inflation, Retail Sales, and AI Earnings Dominate This Week's Calendar
Monday has no significant U.S. economic data; the market will digest the oil price rebound and Berkshire earnings. Rocket Lab reports earnings after the close; commercial launch progress, order backlog, and next-gen rocket investment are key focus areas.
On Tuesday, CoreWeave and Lumentum report earnings. CoreWeave will update on AI cloud demand, capital expenditures, and financing costs; Lumentum's revenue guidance will test whether optical communications demand can sustain. The optical interconnect sector saw significant gains last week; earnings need to keep pace with valuation changes.
On Wednesday, the U.S. releases July CPI; the market expects headline CPI to rise 3.4% year-over-year and core CPI to rise 2.5% year-over-year. Cisco reports earnings after the close; enterprise network equipment demand, AI orders, and profit margins are key points.
On Thursday, the U.S. releases July PPI and initial jobless claims; Applied Materials reports earnings after the close. Semiconductor equipment orders, HBM-related investments, advanced logic process spending, and next-quarter guidance will impact the equipment and memory supply chain.
On Friday, the U.S. releases July retail sales and the preliminary University of Michigan Consumer Sentiment. The market expects retail sales to grow 0.2% month-over-month. Consumer data will help assess whether weakening employment has begun to affect household spending.
Jobs Data Lowers Rate Hike Probability, CPI to Determine Interest Rate Direction
U.S. July nonfarm payrolls decreased by 23,000, missing the market expectation of an 80,000 increase; data for May and June were revised down by a total of 103,000. The probability of a September rate hike subsequently fell to about 44%; the two-year Treasury yield and the U.S. dollar retreated in tandem, easing some valuation pressure on tech stocks.
If CPI does not exceed expectations, and the 10-year Treasury yield remains around 4.65% or continues to decline, with AI industry chain earnings maintaining growth, indices may still have room to rise. If inflation resurges and oil prices continue to climb, interest rate trades could quickly reverse. The S&P 500 is already at record highs; this week requires both inflation and corporate profits to jointly provide new support.
