For the past few weeks, stocks have surged on modestly positive news, as investors have chased higher exposure following July’s pullback. But last week was the opposite: stocks were only fractionally higher, but, importantly, the news was solidly positive across multiple macroeconomic fronts, strengthening the rally (despite being somewhat tepid).
Positive #1: More strong AI earnings. CSCO, AMAT, CRWV, and other AI tech companies reported stronger-than-expected earnings and had positive commentary about continued demand for AI infrastructure (which means the capex spending that’s powering the economy and earnings growth isn’t slowing anytime soon).
Positive #2: More capital for AI companies. Last Monday, NVDA announced a financing agreement with major alternative asset managers to provide up to $500 billion in financing for NVDA customers, ensuring they have the capital to continue to buy NVDA equipment for AI infrastructure buildout. While this type of agreement does raise concerns about the potential impact of the AI bubble if it bursts, for now (so in the near/medium term), it ensures more supply of capital to keep AI capex spending going, and since that’s powering earnings and economic growth, that’s a good thing for the market (for now, anyway).
Positive #3: Demand for SaaS (Software as a Service). Even the most “hated” part of tech got good news last week, as Silver Lake announced it was in talks to acquire Workday (WDAY). That’s important because it means one of the biggest private equity firms views SaaS as a value at this point, which means they don’t think it’s going away. While not the most important part of tech, software stocks stabilizing would be positive for the market.
Positive #4: More evidence inflation has peaked. Both CPI and PPI met or beat expectations, and it furthered the idea that inflation pressures peaked in May. As a result, September rate hike expectations fell to just 33% while the market now expects just one rate hike for 2026 (and that helped to ease Treasury yields modestly).
Not all the news was good, as the conflict in Iran shows no signs of ending anytime soon. But at this point, it’s operating like a form of “white noise” for investors/traders, and unless there’s material escalation (meaning Brent crude through $90 and moving towards $100), then it’s not likely to offset the other positives helping markets. Bottom line, last week was marked by notably positive headlines that helped to reinforce the gains we’ve seen in stocks over the past month. And while it didn’t spur a material rally, it did solidify and strengthen the gains of the past three weeks.
Source: Sevens Report 8-17-26