August 8, 2026 Market Update

Market Recap: An All-Time High with a Catch

Stocks rose again this week. The rally was sparked early in the week by an easing of geopolitical tensions in the Middle East, which sent oil prices lower and was supported by another round of surprisingly strong corporate earnings. Friday’s weaker-than-expected employment report provided additional support, as it could reduce pressure on the Federal Reserve to raise interest rates.

The bond market offered a more cautious message. Long-term Treasury yields remained near their highest levels in nearly two decades for much of the week before falling on Friday following the employment report. Even after the decline, borrowing costs remain elevated as bond investors continue to weigh persistent inflation and expanding government deficits.

We will be keeping an eye on the divergence between a euphoric stock market and a nervous bond market. For now, Mr. Market seems content to focus on record corporate profits and the outlook for monetary policy. However, the message being sent by rising long-term interest rates may become harder to ignore if the trend continues.

Market Performance

Market Commentary: Does Price Still Matter?

The S&P 500 reached its 25th all-time high of the year this week, rewarding investors who remained patient through the market’s recent volatility. But do higher stock prices also mean investors are overpaying?

One measure worth watching is the Buffett Indicator, which Warren once described as perhaps the best single measure of where overall stock market valuations stand. It compares the total value of publicly traded U.S. companies with the size of the U.S. economy. It now stands near its highest level on record, suggesting stocks are unusually expensive relative to the economy that supports them.

Warren Buffett has long emphasized that the price investors pay for stocks plays a key role in determining their long-term returns. At the same time, he has never treated valuation as a reliable short-term forecasting tool. Expensive markets can remain expensive, particularly when earnings are strong and investor optimism is high.

For most investors, the lesson is not to change course simply because stocks have reached new highs. It is to remain disciplined and keep long-term return expectations realistic. Buffett’s philosophy is ultimately less about predicting what the market will do next than about remaining patient enough to avoid paying any price in hopes of making a profit.

In Case You Missed It: Corporate Earnings Are Playing Catch-Up

S&P 500 earnings are forecasted to rise 47% from a year ago, boosted by unusually large investment gains reported by Alphabet and Amazon. Even excluding those gains, earnings are expected to grow nearly 29% year-over year. Profits have not been great enough to make stocks inexpensive, but they help explain why investors remain willing to pay up for them.