End of Week Market Intelligence rates, oil, and stocks... oh my

Equity Research 21 August 2026 | 1:02PM EDT

End of Week Market Intelligence: rates, oil, and stocks... oh my

US stocks are trading higher Friday but on pace for a 1%+ loss for the week (for the Chris Hussey | S&P 500 as of Friday at 12:30PM) as yields on 10-year Treasuries edge a touch higher Goldman Sachs & Co. LLC (now 4.73%), investors digest a strong Service sector business sentiment survey Sarah Herr gathered by S&P today, and continue to contemplate what a decidedly mixed batch | Goldman Sachs & Co. LLC of consumer-driven stock earnings this week tells us about the trajectory of the economy — all while positioning amidst stubbornly high energy prices and US policy uncertainty.

is Goldilocks packing her bags? was she ever even in the building? 2026 has not been a Goldilocks year for the economy. Rates have been high, oil prices have been higher, and the Fed changed leadership. But for Corporate America, Goldilocks appears to be firmly behind the porridge. 2Q26 earnings growth exceeded 30% and the median stock even saw earnings grow 14% as Ben Snider discussed in last Friday’s Kickstart, “What Q2 earnings reports signaled about the state of corporate AI adoption.” The ‘promise’ of AI coupled with the infrastructure spending necessary to fuel this ‘promise’ remains a critical factor behind US earnings growth. But as Snider highlighted last week, the AI trade may be poised now to transition to a much broader earnings growth catalyst of productivity enhancements, margin expansion, and increased efficiencies across a range of functions touching a broad swath of industries.

As we wait for this next leg of the AI trade, however, investors this week are digesting a slew of data points that suggest, perhaps, that 2H26 could be a tougher road to travel than 1H26. Here are a few things we are watching:

1. Rates. This week’s announced increase in liquidity buybacks by Treasury reflects greater willingness to actively manage the supply/demand balance for UST’s, but is unlikely to have a lasting impact on rates if the underlying macro drivers of recent volatility are not addressed writes Friedrich Schaper in “Fed Communication and Term Premium.” And indeed, after first falling 8bp, yields on 10-year UST’s are now back to the same levels they were prior to Treasury’s announcement. The good news: the Fed is unlikely to put further pressure on rates by hiking the Fed funds rate this year writes Jan Hatzius in “They’re Not Hiking.” But markets may also have to absorb greater ambiguity from the Fed under new leadership as Allison Nathan explored in a fresh Top of Mind this week, “Assessing a less transparent Fed.” Higher rates have traditionally been a

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Goldman Sachs End of Week Market Intelligence

headwind for stock price appreciation. But this year stocks have charged right through a 50+bp increase in 10-year yields, with the S&P 500 still up over 12% ytd. 2. The consumer. Besides rates, the US consumer was very much in focus this week with a slew of companies reporting results, including WMT which saw a surprising deceleration in same store sales growth in its quarter ended July 31st (see Kate McShane’s : “WMT: Q2 top line slows sequentially, while 2026 guidance is raised”). Jan Hatzius highlighted how we now expect to see a marked slowdown in consumer spending growth in 2H26 to a below-trend pace of 1.0-1.5% as the impact of tax refunds wanes and consumers face ongoing gasoline price headwinds (see also Ronnie Walker’s “Earnings Season Takeaways: Consumer Strength Before the Slowdown” and Megan Peters’ “G10 Consumer Dashboard: July 2026: Spending Starts to Slow”). 3. Business sentiment. The Philly Fed Index expanded…