Here is Schwab's early look at the markets for Monday, August 18.

Data mostly takes a summer holiday this week while the Federal Reserve departs on a working vacation to Wyoming. And "big box" stores flock to the aisles to deliver their latest results. All this after major indexes delivered another positive week and finished near record highs despite a lackluster Friday.

A smattering of housing data follows last week's excitement over a Producer Price Index well above expectations. The PPI data raised concerns about inflation just as the Fed appeared ready to lower rates in response to a slowing jobs market.

Retail sales Friday were met Wall Street's expectations, up 0.5% in July and ticking higher for June. But the 0.9% PPI increase was the highest since 2022 and appeared to indicate tariffs having an effect at the wholesale level. This raises concerns that the impact might eventually trickle through to consumer prices.

"Tariff policy is still evolving, and the full economic impact has yet to be felt," said Michelle Gibley, director of international research at the Schwab Center for Financial Research. "President Trump suggested 200% or 300% tariffs on semiconductors Friday, but in recent weeks he noted there could be exemptions if companies either manufacture or announce plans to manufacture in the U.S. The inconsistency between announcements and implementation makes it difficult for companies and investors to measure the impact of tariffs."

Uncertainty may also be showing up at the consumer level, despite Friday's reassuring retail sales data. Preliminary August Consumer Sentiment from the University of Michigan released Friday dropped 5% month over month on Friday to 58.6. The Briefing.com consensus had been 61.3, down from the prior figure of 61.7 and still relatively low historically. Preliminary expectations for inflation increased to 4.9% from 4.5% in July, suggesting consumers are growing more wary about the potential for rising prices.  

As the old week ended, the CME FedWatch tool calculated odds of a September rate cut at 85%–down from 100% before Thursday's bearish PPI surprise. Ideas that the Fed might deliver a double-cut of 50 basis points in September basically went out the window with PPI, and now there's talk that Fed Chairman Jerome Powell might give a "hawkish cut" of 25 basis points next month that includes cautionary language about prices.

The market also shows a 15% chance of rates staying at the Fed's current target range between 4.25% and 4.5%, and the benchmark 10-year Treasury yield climbed back above 4.3% Friday.

The yield pop reflected strong retail sales and rising July import prices along with an increased one-year inflation outlook in the consumer sentiment data. The 10-year yield rose four basis points overall last week, while the dollar index continued slipping. The Atlanta Fed's GDPNow forecast for third quarter gross domestic product (GDP) growth remained at 2.5% Friday.

The Fed is arguably in decent position to cut rates 25 basis points even with the PPI data surprise, considering the surprise before that was a huge 258,000 downward revision to May and June jobs growth. And the current Fed target range hasn't moved since last December and remains above short-term Treasury yields.

Investors may get enlightened on all this starting Thursday when Powell and other global central bank leaders retreat to the Fed's annual Jackson Hole Economic Policy Symposium in Wyoming. Powell delivers his Economic Outlook and Framework Review speech at 10 a.m. ET Friday.

Powell's speech follows Tuesday's July housing starts and building permits and Thursday's July existing home sales. Between those, investors get Fed minutes from the July meeting Wednesday afternoon, which could be a tasty appetizer for the Jackson Hole meeting since the July rate decision was the first in decades to feature two policy makers dissent by voting to lower rates.

The other main thing this week is earnings from key retailers including Home Depot tomorrow, Lowe's and Target on Wednesday, and Walmart on Thursday. Earnings season is more than 90% complete and average earnings growth so far has easily surpassed analysts' pre-quarter estimates.

As retailers step up to report, tariffs are likely to be a big issue. One key question is whether and by how much retailers are passing along tariff costs to consumers. Judging by recent media reports, these price "pass-throughs" are relatively widespread. It may take time for it all to come through in Consumer Price Index (CPI) reports however, since tariffs didn't all hit at once and because many companies were able to continue selling products they stocked up on ahead of tariffs.

Looking ahead to retail earnings this week, it's worth looking back at Amazon's latest results for clues. It kicked off retail earnings in late July with 10% year-over-year sales growth at its online stores (on a constant currency basis). That was a dramatic improvement from 6% in that category a year earlier. Amazon emphasized "the biggest Prime Day event ever," though it didn't mention that Prime Day now takes place over several days.  

On Friday, stocks moved modestly lower as traders engaged in some profit taking after a strong week. The Dow Jones Industrial Average outperformed its sector peers, touching an all-time high in intraday trading before closing marginally higher.

As the closing bell approached, eyes turned to Alaska, where President Trump met with Russian President Vladimir Putin to discuss a potential end to the war in Ukraine. Notably, Ukrainian President Volodymyr Zelenskyy was not invited. Initial reports from the summit showed the U.S. and Russian leaders shaking hands in Anchorage after Trump told reporters on the way that he wants to "see a cease-fire—rapidly," Barron's reported. Crude oil fell sharply Friday on hopes of progress,

Helping boost the Dow Jones Industrial Average ($DJI) Friday was UnitedHealth, which jumped 12%, its best day since 2008. The embattled insurance provider rallied after Berkshire Hathaway disclosed a 5-million-share stake worth roughly $1.6 billion. Also, several solar power stocks were shining Friday after the Treasury department issued guidance on how renewable projects could qualify for tax credits under Trump's budget bill, CNBC reported.

On the lagging side, Applied Materials gave back double digits after a disappointing quarterly outlook. Cisco also saw red, losing ground after an earnings and ratings downgrade at HSBC.

On the sector scoreboard, Friday featured the third losing day in a row for info tech, which is still up more than 15% year to date. Health care has been ascendant lately and was again Friday thanks partly to UnitedHealth.

Technically, last week ended on a sour note with selling accelerating during the final half hour of Friday's session. But the broader market is still up nearly 4% since the end of June and summer is often a seasonally soft time of year. If there's more selling this week, one level to watch is the 20-day moving average for the S&P 500 index, a level near 6,366. That moving average held on a support test earlier this month.

The Dow Jones Industrial Average® ($DJI) climbed 34.86 points Friday +0.08%) to 44,946.12; the S&P 500 index (SPX) fell 18.74 points (-0.29%) to 6,449.80, and the Nasdaq Composite® ($COMP) lost 87.69 points (-0.40%) to 21,622.98.

For the week, the DJIA rose 1.74%, the S&P 500 index added 0.94%, and the Nasdaq climbed 0.81%.