The July Consumer Price Index rose 0.1% month-over-month and core CPI climbed 0.2%, both at or below the Dow Jones consensus estimate, according to data published Wednesday. A day later, July producer prices also came in below expectations, completing a pair of soft inflation prints that gave markets the all-clear on near-term monetary policy. The S&P 500 responded by closing at a record 7,798.99 on Thursday, surpassing the 7,800 level intraday for the first time. The Nasdaq Composite gained 0.81% to 26,803.03, driven by advances in chip stocks, Meta Platforms, and Netflix, while the Dow added 69.72 points to 53,839.99.
The probability of the Fed raising rates at the September 16 FOMC meeting fell to roughly 34%, down from around 55% the prior week, according to CME FedWatch data cited by Edward Jones. The 2-year Treasury yield, the instrument most sensitive to Fed rate expectations, dropped about 8 basis points to 4.12% on Thursday, another tailwind for equities. Former Dallas Fed President Robert Kaplan said publicly that the Fed was correct to hold rates in July, adding institutional credibility to the pause narrative ahead of the Jackson Hole Economic Symposium on August 28.
Friday brought two final data points for the week. The Census Bureau released its advance retail sales estimate for July at 8:30 a.m. ET, while the University of Michigan published its preliminary August consumer sentiment reading at 10:00 a.m. ET. The July sentiment index revised to 55.2 in its final reading, its highest level since February, though it remains 11% below a year ago amid persistent concerns over elevated prices. One-year inflation expectations held at 4.2%, substantially above historical norms, signaling that households still feel price pressure even as headline inflation moderates.
Heading into the session, stock futures were mixed, with S&P 500 futures up just 0.01% and Nasdaq 100 futures slightly negative, reflecting caution around the retail data and ongoing geopolitical tension in the Middle East. Brent crude shed more than 2% to $87.07 on Thursday and WTI settled at $81.25, as traders weighed falling oil demand against the continuing U.S.-Iran conflict. For business operators, the rate-hold environment is the most actionable signal: borrowing costs are unlikely to rise in September, giving owners more time to refinance or plan capital expenditures without fear of an imminent rate shock.
Friday's dual data releases u2014 the Census Bureau's advance July retail sales and the University of Michigan's preliminary August consumer sentiment u2014 are the last major economic readings the Fed chair will have before the August 28 Jackson Hole keynote. Consensus headed into Friday called for modest retail sales growth, reflecting a consumer that remains resilient but increasingly stretched by elevated prices. The July final sentiment reading of 55.2 was the highest since February but still 11% below a year earlier, with one-year inflation expectations holding at 4.2%.
Brent crude futures fell more than 2% to close at $87.07 per barrel on Thursday, and West Texas Intermediate settled at $81.25, as traders weighed weakening demand signals against the backdrop of the ongoing U.S.-Iran conflict. The U.S. announced it could maintain its naval blockade of Iran indefinitely, adding to supply-side uncertainty. The International Energy Agency has forecast global oil supply could fall by 4.3 million barrels per day, roughly 4%, this year.
A 50% additional tariff on roughly $20 billion of Canadian imports takes effect at 12:01 a.m. ET on August 19, 2026, under three Section 338 proclamations signed by President Trump on July 20. Coverage spans motor vehicles, dairy, alcoholic beverages, cement, furniture, clothing, fishing rods, and more u2014 and critically, USMCA certification provides no exemption. The tariff stacks on top of existing duties rather than replacing them. Trade compliance firms are urging importers to verify HTS codes against proclamation annexes before the deadline, because CBP applies the duty based on the customs entry date, not the order or shipment date.
Anthropic is in advanced discussions to acquire Israeli AI infrastructure startup Decart AI for approximately $6 billion, Bloomberg and Reuters reported on August 13, with the story actively developing Friday. The deal, Anthropic's largest known acquisition, would bring Decart's chip-efficiency software u2014 designed to squeeze more performance from Nvidia GPUs, TPUs, and Amazon silicon u2014 into Anthropic's inference team, helping the Claude maker scale without proportionally increasing compute costs. Anthropic filed a confidential S-1 with the SEC in early June and is expected to list as early as October; the acquisition appears aimed at shoring up its cost-efficiency narrative for public investors. Talks have not been finalized and could fall through.
The United Kingdom's AI Regulation and Safety Bill cleared the House of Commons on August 14, formalizing the AI Safety Institute's statutory powers and granting it the legal right to inspect foundation models before deployment, with Royal Assent expected by October. Separately, the EU AI Act's enforcement period for high-risk systems is now active following the entry into force of the AI Omnibus simplification regulation on July 27; the European AI Office and 24 national authorities are conducting active audits. U.S. businesses face a fragmented domestic landscape, with corporate legal teams navigating at least 14 different state-level AI frameworks.
Semiconductor names drove much of Thursday's equity gains, with Micron rising 4.2%, Marvell up 3.6%, and SanDisk surging 13.7%, as Anthropic's Decart pursuit reinforced expectations for sustained AI infrastructure spending. Intel's $20 billion equity raise, completed earlier this week, was characterized by Bank of America analysts as net positive for foundry scale, though it dilutes earnings per share by roughly 5%. In contrast, Cisco slumped 8.4% after projecting a slowdown in AI data-center sales for its current fiscal year, a cautionary signal for vendors in the AI hardware stack.
The CNBC/NRF Retail Monitor, powered by anonymized card transaction data, showed total retail sales excluding auto dealers and gas stations rose 0.32% month-over-month and 5.15% year-over-year in July, marking the 10th consecutive month of gains. Electronics, digital products, and health and personal care led category growth. NRF president Matthew Shay said consumers took advantage of midsummer sales and early back-to-school promotions. The official Census Bureau advance retail sales estimate for July was released Friday morning and represents the government's first read on the same period.
August 2026 marks the beginning of real enforcement for businesses using AI tools, particularly in hiring, finance, healthcare, and customer-facing applications. Europe's AI Act is now in active enforcement following the AI Omnibus entering force on July 27, and the EU AI Office is auditing high-risk systems. In the U.S., at least seven states have enacted significant AI legislation, and corporate legal teams are moving toward adopting the strictest state standard across all U.S. operations rather than managing 14 different frameworks. Businesses that cannot clearly explain what AI tools they use, what data feeds them, and what decisions they influence face heightened legal exposure and potential loss of enterprise customers.
The soft inflation prints this week are genuine good news for business owners with variable-rate debt or plans to borrow. The probability of a September rate hike has fallen sharply, and the 2-year Treasury yield has eased to 4.12%. That does not mean rates are coming down soon u2014 the Fed is likely to hold steady, not cut u2014 but the risk of another hike in the near term has substantially diminished. For owners refinancing equipment, commercial real estate, or a line of credit, now is a reasonable window to lock in terms before the Jackson Hole speech on August 28 introduces new uncertainty.
Any business that sources goods from Canada has five days to audit its import exposure before the Section 338 tariffs land on August 19. The 50% additional duty covers a wider product range than most headlines suggest u2014 motor vehicles, dairy, and alcohol got attention, but the annexes also include cement, plywood, furniture, clothing, fishing equipment, seeds, and dozens of other categories. USMCA certificates of origin provide no protection here, and the duty applies based on the customs entry date, not when goods were ordered or shipped. Operators should run a landed-cost recalculation on any Canadian-sourced inventory scheduled to cross the border on or after August 19 and talk to their customs broker before the week is out.