US equities lock in third weekly gain as Fed pause odds rise

Nasdaq 100 and Dow Jones eye key levels as Fed pause bets grow

United States (US) equity markets closed lower on Friday as weaker-than-expected economic data and ongoing geopolitical uncertainty weighed on risk sentiment heading into the weekend. That said, the week still ended positively for the major indices, with the Nasdaq 100 finishing 1.09% higher and the S&P 500 managing a 0.36% gain – marking a third consecutive weekly advance for both – while the Dow Jones finished 305 points (-0.56%) lower.

July retail sales fell 0.6% month-on-month (MoM), missing expectations for a 0.1% rise and recording the first decline since October 2025. While part of the drop reflected payback after Amazon shifted its Prime Day earlier into June, the sharper-than-expected weakness also points to the earlier strength in consumer spending having been boosted by the temporary lift from tax refunds.

Taken together with last week's cooler-than-expected consumer price index (CPI) and producer price index (PPI) numbers, Friday's soft retail sales and the sharp drop in the University of Michigan's preliminary August consumer sentiment reading to 51 (from 55.2 prior) lifted the odds of the Federal Reserve (Fed) remaining on hold at its September meeting to 67%.

On the earnings front, the US second quarter (Q2) 2026 reporting season is now about 90% complete, with consensus expectations for earnings growth having risen to around 33% year-on-year (YoY) from 24% at the start of the season. This week brings results from a solid slate of names including Home Depot, Baidu, Target, Lowe's, Walmart, Alibaba and Deere & Co.

The key data release to watch will be the August S&P flash purchasing managers' indices (PMIs) previewed below, which should give an early read on whether the mid-year acceleration in US business activity is holding up or starting to soften in line with some of the other recent data. 

S&P Global Composite PMI (Flash)

Date: Friday, 21 August at 11.45pm AEST

In July, the S&P Global US Composite PMI rose to 54.5 from 51.9 in June, beating the preliminary estimate of 53.6 and reaching an eight-month high.

The improvement was driven largely by the services sector (Services PMI lifted to 54.6 in July from 51.2 prior), where firms reported the strongest rise in new business since November. This was helped by a temporary lift from FIFA World Cup and Independence Day spending, along with higher investment in sales, marketing and product development. Manufacturing growth, as measured by the Manufacturing PMI, held at 53.9, signalling another solid month of expansion in factory activity.

US S&P Global composite PMI chart

Nasdaq 100 technical analysis

From its late-March low of 22,841, the Nasdaq 100 launched a powerful 35% rally in just over nine weeks to reach a record high of 30,762 in early June. The correction that followed into the late-July low of 27,176 played out largely as expected.

In early August, we declared the correction complete and shifted to a bullish bias after the index rebounded back into its trend channel and closed above 28,500 (as outlined here).

A sustained break above trend-channel resistance, currently near 30,200, would open the way for a retest and break of the 30,762 record high, with scope towards 32,000. The short-term reassessment level is a sustained break below support at 28,800, while the more important level remains the late-July low of 27,176.

Nasdaq 100 cash daily chart

Dow Jones technical analysis

From its late-March low of 45,063, the Dow Jones staged an impressive and orderly rally into the August 54,749 high. Within that – pullbacks in June and July of around 3.3% held logical support zones at 50,000 and 51,500 before the index regrouped and pushed on to fresh record highs.

Looking ahead, provided the Dow Jones holds above support in the 53,000 area, the uptrend remains intact, with scope for another leg higher towards 56,000. Aware that a sustained break below the 53,000 support zone, however, would signal that a deeper decline is underway, opening the way for a retest of 51,500 and potentially 50,000.

Dow Jones cash daily chart

• _{Source: TradingView. The figures stated are as of 17 August 2026. Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation.}