S&P 500 Logs Third Straight Weekly Gain as CPI Cools to 3.4% and Fed Holds Firm
The S&P 500 closed at a record high of 7,798.99 on August 13, 2026, rising 50.49 points or 0.65%, before easing 0.2% on August 14 — still on pace for a third consecutive weekly gain alongside the Nasdaq Composite, which closed up 0.8% the prior day. The benchmark index has gained nearly 14% year-to-date through mid-August. The Nasdaq's August 13 advance of 0.8% also contributed to a third straight weekly gain for both indices. On August 5, the Dow Jones Industrial Average advanced 0.5%, or 263 points, to close at a record for the third straight day, while the S&P 500 declined 0.2%.
The August 13 record close followed the August 12 CPI release showing U.S. consumer prices increased 3.4% year-over-year. That print landed against a backdrop of more than 40 S&P 500 companies reporting approximately $9.6 billion in tariff refunds, according to WSJ coverage. The inflation data prompted traders to add to bets favoring no change in rates at the Federal Reserve's September 15–16 meeting, pricing a 38% chance of a rate hike next month. The FOMC held its benchmark rate steady at a target range of 3.50% to 3.75% at the July 28–29 meeting, extending a pause that has now persisted through at least three consecutive meetings, including the April 2026 gathering. The Fed has forecast one rate cut in 2026.
For context, the Fed's current 3.50%–3.75% range reflects a cumulative easing cycle from the post-pandemic peak, but the persistence of 3.4% inflation — still above the central bank's 2% target — keeps the real policy rate in mildly restrictive territory. The 38% probability assigned to a September hike, rather than a cut, signals that markets are pricing in a non-trivial tail risk of tightening, which would be a materially hawkish surprise if it materialized. This stands in tension with the FOMC's own dot-plot signaling a single cut, suggesting the market is hedging against the possibility that tariff-driven cost pressures or sticky services inflation force the committee's hand.
The divergence in sector performance is worth noting. The S&P 500 Information Technology sector index stood at 6,950.20 with a daily price return of -1.10% as of mid-August, underperforming the broader index on that session. A retail ETF had added roughly 4% year-to-date, lagging the S&P 500's near-14% advance by a wide margin. That dispersion between consumer-facing cyclicals and the tech-heavy benchmark is consistent with an environment where tariff-related cost uncertainty weighs on margins for companies with greater imported-goods exposure, while mega-cap technology — less sensitive to import tariffs — continues to drive index-level returns. The S&P 500 Focused 50 Index, a concentrated variant tracking 50 high-conviction names, stood at 5,767.07 as of August 13, and the S&P 500 Scored & Screened Index (a sustainability-screened variant) was at 688.75 as of August 10, with a one-year price return of 23.97%.
Looking further back, the current momentum extends a trend visible since late spring. In the week of May 22, the S&P 500 rose 0.4% on Friday and 0.9% for the week, clinching its longest weekly winning streak since December 2023.
The broader picture through mid-August 2026 is one of a market grinding to new highs on cooling-but-still-elevated inflation, with the Fed on hold and equity gains concentrated in technology mega-caps rather than broad-based sectors. The tariff refund data — $9.6 billion across more than 40 S&P 500 companies — hints at the scale of trade-policy friction working through corporate income statements. Companies are recovering duties previously paid, which provides a one-time earnings tailwind, but the underlying tariff regime remains a structural cost factor for import-dependent businesses. The retail sector's 4% year-to-date gain against the S&P 500's 14% captures that dynamic in miniature.
For savers, the 3.50%–3.75% federal funds range translates to money market yields and short-term CD rates that remain attractive in nominal terms but are losing ground to 3.4% inflation in real terms. For borrowers, the hold means variable-rate credit products and adjustable-rate mortgages stay anchored at current levels. The 38% implied probability of a September hike, while a minority outcome, is high enough to warrant attention: a shift from pricing a hold to pricing a hike would ripple through rate-sensitive equities, the Treasury curve, and credit spreads.
What remains unresolved is whether the CPI moderation to 3.4% is a reliable trajectory toward the Fed's target or a plateau. One data point does not establish a trend. The FOMC's September 15–16 meeting will be informed by another month of inflation and labor-market data between now and then, and the market's current pricing reflects genuine uncertainty about the path rather than conviction in either direction.
