HOTLINE
Hotline Archive
August 14, 2026
This is John Bonnanzio with a Fidelity Monitor & Insight Hotline update for Friday evening, August 14.
There are no model portfolio trades advised.
There was little to dislike about this week’s financial markets. In a nutshell, stocks rose and so did some bond prices. Indeed, if not for the prior week’s outsized gains (which saw the Nasdaq Composite jump by over 5%), investor response to this week’s developments might have been more enthusiastic.
As for the week’s market-moving news, about the only downbeat “development” was the Strait of Hormuz and the inability of the U.S. and Iran to reach any kind of a resolution that would fully open the waterway.
Closer to home, two key inflation reports dramatically lowered the odds of a rate hike when the Fed next meets in September. Indeed, economists expected both retail and wholesale inflation to have risen more than they did last month. For its part, the Consumer Price Index increased by 0.1% month-over-month whereas the Producer Price Index was unchanged.
That said, today’s weak retail sales report (which showed sales falling 0.6% in July from June) suggests that consumers are being careful, perhaps because of unease regarding AI and possible weakness in the job market. (Last week, nonfarm payrolls fell by 23,000.)
On a more positive note, second-quarter corporate earnings continue to lift market optimism and share prices. With about 90% of S&P 500 companies having now reported, over 85% have exceeded Wall Street’s earnings expectations. That’s far in excess the 5- and 10-year averages of 76 to 78%. That said, blended year-over-year earnings growth of about 47% has been greatly amplified by just two companies: Alphabet and Amazon. Without them, that figure falls to just over 30%, though even that level would mark the best pace of growth in four years.
The bottom line is this: over the long term, stock prices follow earnings.
For the week through Friday’s close, the S&P 500 and Nasdaq posted fractional gains of 0.4% and 0.1%, respectively. Meanwhile, the big-cap Dow Industrials slipped 0.6%, versus gains of 1.1% and 1.4%, respectively, for Russell’s more interest-rate sensitive small (2000) and mid-cap gauges.
Most overseas markets also took a breather (the Stoxx Europe 600 slipped 0.4% and London’s FTSE 100 was off 1.4%), however Japan’s Nikkei jumped 4.7% owing to big gains by chipmakers and AI-related companies. Emerging market stocks (in dollar-terms) rose 2.3% thanks to easing concerns over U.S. interest rates.
On that note, yields on shorter-term Treasury bills and notes eased owing to the latest inflation data. On the other hand, intermediate- to long-term notes and bonds did see their yields rise slightly (meaning prices fell) as concerns remain that the Fed may need to tighten rates later in the year. In addition, the size of the federal deficit is said to be increasing.
Against that backdrop, the yield on the benchmark 10-year Treasury note rose 3 basis points to finish the week at 4.68%.
| Our model performance as of Friday's close is listed below: | ||
|---|---|---|
| Week | YTD | |
| S&P 500 | + 0.4% | + 14.5% |
| Barclays US Aggregate Bond | - 0.1% | - 0.2% |
| Income Model | + 0.1% | + 5.9% |
| G&I Model | + 0.4% | + 11.7% |
| Growth Model | + 0.5% | + 16.6% |
| Select System | + 1.3% | + 19.8% |
| Unique Opportunities Model | + 0.5% | + 15.2% |
Please Note: Fidelity Fund, Growth Discovery, Mega Cap Stock, Mid Cap Value Index, Small Cap Growth Index, and Small Cap Value Index posted large distributions on Friday.
Correction: Last week I wrote that “the Nasdaq Compose rode a wave of AI optimism to a record close today.” That was incorrect. While the S&P 500 did close at a record high, an alert reader pointed out that Nasdaq’s all-time high of 27,093.90 was reached on Tuesday June 2, whereas the index finished last week (August 7) at 26,690.62. (As a point of interest, the tech-rich benchmark’s intra-day high of 27,190.21 was set on June 1.) My apologies for the mistake.
Finally, our next regularly scheduled Hotline update is Friday evening August 21.
Fidelity Monitor & Insight's Hotline is updated on Friday evenings or whenever the Dow moves 1,000 points or more in either direction.