Market Insights

Unexpected dealmaking is lifting stocks as investors brace for a key event on Friday.

The S&P 500 rose 0.9 percent between Friday, August 8, and Friday August 15. It was the fourth gain in the last five weeks. There was also a surprising mix of investor transactions impacting major companies.

Intel (INTC) had its second-biggest weekly gain this century after Bloomberg News reported that the U.S. government may purchase a stake in the ailing chipmaker. Most of the rally was simply a recovery from its drop following a weak quarterly report in July. The news followed the Pentagon’s investment in rare-earths producer MP Materials (MP). Both moves involved national-security concerns.

UnitedHealth (UNH) had its biggest weekly gain since 2008 after Warren Buffett’s Berkshire Hathaway (BRK.B) amassed 5 million shares. The investment represented less than a 1 percent stake in the ailing health insurer, which lost more than half its value in the preceding year. (See this story for more on why companies like UNH have been sliding.)

TKO Group (TKO) had its biggest weekly gain in more than two years after announcing a key media rights deal for UFC. The transaction with Paramount Skydance (PSKY) would bring in $1.1 billion for each of the next seven years. TKO, which includes the old World Wrestling Entertainment, joined the S&P 500 in March. PSKY rose the most since 2020.

Powell at Jackson Hole

Those headlines were dramatic at the individual-company level. A bigger event for the entire market is scheduled for 10 a.m. ET on Friday, when Chairman Jerome Powell speaks at the Federal Reserve’s annual symposium in Jackson Hole, Wyoming.

It could be a significant catalyst that will reveal the course of interest-rate cuts. The market broadly expects a 25-basis point reduction on September 17, but subsequent moves are less clear.

On one hand, policymakers face pressure from the White House to lower rates. Last week, for instance, saw multiple economists vying for attention by endorsing looser monetary policy. (CNBC reported that at least 11 candidates are under consideration to replace Powell in May.) President Trump also threatened a “major lawsuit” against Powell, the latest in a series of attacks connected to the Fed’s renovation.

On the other hand, economic data may not support aggressive rate cuts. The core consumer price index (CPI) rose 3.1 percent year-over-year in July. The core producer price index (PPI) jumped 3.7 percent by the same measure. (Monthly changes were less significant.) Consumer sentiment also fell more than expected — in part because of inflation worries. Initial jobless claims were also lower than forecast, reflecting stability in the labor market.

Markets will closely monitor Powell’s comments for clues about his intentions for the remainder of the year. His last speech on July 30 was relatively hawkish, emphasizing “there should be no doubt that we will do what we need to do to keep inflation under control.”

Airlines, Solar Jump

The inflation data showed airfares jump 4 percent between June and July, the biggest increase since May 2022. That helped airline stocks enjoy their biggest weekly gain in more than two years. United Airlines (UAL) also got a credit rating upgrade from S&P, which cited improving profitability.

Solar energy stocks rallied after IRS published rules that could incentivize clean-energy installations.

Biotechnology stocks, homebuilders and Chinese technology stocks also climbed.

Healthcare was the strongest major sector, supported by UNH. Communications and consumer discretionaries also outperformed.

Utilities, consumer staples and gold — traditional safe havens — sputtered. Technology also lagged as companies like Applied Materials (AMAT), Cisco Systems (CSCO) and Palantir Technologies (PLTR) retreated.

AMAT fell on weak guidance. The provider of semiconductor equipment warned of high inventories in China and shifting government policies.

Packaging company Amcor (AMCR) had its worst week since the pandemic because of slowing volume in North America. On the conference call, CFO Michael Casamento cited “ongoing uncertainty surrounding tariffs and their potential impact on customers and end consumers.”

Tariffs also hurt Tapestry (TPR), the parent of retail brands like Coach.

CSCO fell despite beating estimates.

Weak revenue hammered restaurant chain Cava (CAVA) by 18 percent, its biggest weekly drop since going public in 2023. The selloff followed similar declines recently in peers like Chipotle Mexican Grill (CMG) and Sweetgreen (SG).

Charting the Market

The S&P has been steadily trending higher, with few bearish signals. Prices have remained above the rising 21-day exponential moving average and pullbacks have been relatively shallow.

Wilder’s Relative Strength Index (RSI) reached overbought conditions in early July and late July. Last week it turned down from a slightly lower peak. That’s a potential sign of slowing momentum that isn’t yet confirmed.

If a pullback occurs, traders may eye 6,200 as key support. That’s where the index bounced in July and early August.

Investors may also watch Treasury yields because they impact borrowing costs across the economy. The 10-year Treasury yield has remained above 4.2 percent since early May and could be impacted by Powell’s speech. Further upside could potentially weigh on stocks.

S&P 500, daily chart, with select patterns and indicators.

The Week Ahead

The stock market is now entering the “dog days of summer,” a traditionally slow period before Labor Day.

The calendar includes a few noteworthy items aside from Powell’s speech. The housing industry is especially active.

NAHB releases its homebuilder sentiment index this morning. Palo Alto Networks (PANW) reports earnings in the afternoon.

Tomorrow brings housing starts, building permits and results from Home Depot (HD).

Target (TGT), TJX (TJX) and Baidu (BIDU) reports earnings on Wednesday. There are also crude-oil inventories and minutes from the last Fed meeting.

Initial jobless claims, existing home sales and Walmart (WMT) earnings are on Thursday.

Powell speaks on Friday at 10 a.m. ET.