August rally takes a breather
- Market pulls back amid rising oil, high yields, choppy tech
- Biotech fuels health-care sector gains, crypto surges
- This week: payrolls revision, Fed inflation, NVDA earnings, GDP
US stocks are still in a favorable position to log a positive August, but the potential gain is looking a bit smaller after a down week highlighted by concerns about high long-term Treasury yields, tech volatility, and rising oil prices.
Last Thursday the S&P 500 (SPX) posted its lowest close since August 3, but trimmed its loss modestly with a Friday bounce:
Source: Power E*TRADE. (For illustrative purposes. Not a recommendation. Note: It is not possible to invest in an index.)
The headline: Stocks snap three-week win streak.
The fine print: Electronic components and semiconductors were (again) the weak links in the tech chain, but a different type of tech was unexpectedly bullish. Biotech was the SPX’s strongest industry group last week, and was a big reason health care was the index’s strongest sector. Moderna (MRNA) led the charge with a 177% rally last Wednesday following news of successful clinical trial results from its collaboration with Merck (MRK) on a melanoma cancer vaccine.
The move: The 30-year US Treasury yield hit 5.31% last Monday (its highest level since June 2007) and ended the week up 0.01% at 5.27%—despite a 0.12% decline last Wednesday after the Treasury Department announced it would increase its buybacks of long-term Treasury debt in order to tamp down long-term rates.
The scorecard: The Dow Jones Industrial Average (DJIA) lost the least ground last week:
Source (data): Power E*TRADE. (For illustrative purposes. Not a recommendation.)
S&P 500 sector returns: The strongest S&P 500 sectors last week were health care (+4.3%), energy (+2.5%), and materials (+2.3%). The weakest sectors were utilities (-3.6%), industrials (-3.4%), and tech (-3.2%).
S&P 500 stock movers: Last week’s biggest gains were Moderna (MRNA) +129% to $145.13, Coinbase (COIN) +26% to $186.49, and Estee Lauder (EL) +18% to $101.94. The biggest losses were Reddit (RDDT) -14% to $153.29, Jabil (JBL) -14% to $313.21, Seagate (STX) -13% to $850.
Yields and the dollar: The 10-year Treasury yield climbed 0.04% to 4.73% last week—its highest level since January 2025. The US Dollar Index (DXY) fell 0.87 to 98.80.
Commodity futures: October WTI crude oil (CLV6) climbed +6.9% to $87.06 last week as US-Iran tensions reheated. December gold (GCZ6) rallied more than 5.5% to $4,680.60.
Crypto: A huge Friday rally led to a big week for cryptocurrencies, with Bitcoin rallying 24.4% to $78,335.18 and Ethereum surging 33.8% to $2,515.28.
Coming this week
A busy final week of August includes inflation (PCE Price Index), the annual payrolls revision, GDP, the Jackson Hole symposium, and much more:
●Monday: Chicago Fed National Activity Index
●Tuesday: S&P Case-Shiller Home Price Index, FHFA House Price Index, Consumer Confidence, New Home Sales
●Wednesday: Q2 GDP (second estimate), PCE Price Index, Personal Income and Spending, Durable Goods Orders
●Thursday: Goods Trade Balance (advance), Retail and Wholesale Inventories (advance), Jackson Hole Symposium
●Friday: Chicago PMI, Non-Farm Payrolls Annual Revision, Consumer Sentiment, Jackson Hole Symposium
More retail names crowd this week’s earnings calendar, but NVIDIA (and a handful of other high-profile tech names) will likely be the center of attention:
●Monday: BHP (BHP), BJ's Wholesale Club (BJ), Napco Security (NSSC), PVH (PVH), Trip.com (TCOM)
●Tuesday: Box (BOX), Dick's Sporting Goods (DKS), Five Below (FIVE), Intuit (INTU), Urban Outfitters (URBN), Williams Sonoma (WSM), Zoom Communications (ZM)
●Wednesday: Agilent (A), Abercrombie & Fitch (ANF), Burlington Stores (BURL), Salesforce (CRM), CrowdStrike (CRWD), HP (HPQ), Kohl's (KSS), NVIDIA (NVDA), Okta (OKTA), J.M. Smucker (SJM)
●Thursday: Affirm (AFRM), Best Buy (BBY), Dollar General (DG), Dollar Tree (DLTR), The Gap (GAP), HealthEquity (HQY), Hormel Foods (HRL), Marvell Technology (MRVL), Rubrik (RBRK), Ulta Beauty (ULTA)
●Friday: nCino (NCNO), Ollie's Bargain Outlet (OLLI), Victoria's Secret (VSXY)
Beyond coffee: The buzz about caffeine
A recent AlphaWise survey helped fuel Morgan Stanley & Co. analysts’ favorable take on caffeine as an investment theme, especially their heightened confidence about “outsized and durable growth” for energy drinks and beverage shops. Three important takeaways from their research:
1. Energy drink net “consumption intentions” are up from their prior two surveys.
2. Energy drink consumption doesn’t depend solely on a younger demographic—consumers are increasingly staying in the category as they age.
3. Energy drink consumption frequency has significantly increased.
The analysts also note this is a category that has continued to grow even as consumers have become more selective about “away-from-home” food.
Finally, there’s also a potential connection to the GLP-1 boom. Continued expansion of the obesity drug market could be a tailwind for energy drink and coffee demand, the analysts explain, with GLP-1 users needing additional energy to help compensate for weight loss and overall reduction in calorie intake. The report highlights preferred stock plays, encompassing both coffee chains and energy drink companies.1
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1 MorganStanley.com. Wired for Growth; How to Play an Increasingly Caffeinated Consumer. 8/20/26.