Here is Schwab's early look at the markets for Monday, August 17.

Friday's worse-than-expected July retail sales triggered economic worries approaching this week's retail earnings and Federal Reserve minutes. Home Depot, Target, and Walmart report in coming days and the S&P 500 Index finished Friday just off Thursday's all-time highs. Stocks fell Friday as oil and yields climbed, with no signs of war progress.

This week is light on data but includes the Treasury Department's monthly Treasury International Capital (TIC) report later today. This tracks flows into and out of U.S. assets, and lighter inflows could ultimately lead to a weaker U.S. dollar and higher Treasury yields.

Worries about Japan possibly hiking rates might have propelled some of yield gains Friday that helped pressure U.S. stocks. Japan and the U.S. bought yen earlier this month, and there's concern Japan might try to support the yen not only through rate hikes but also by selling U.S. Treasuries.

In data Friday, July retail sales fell a surprising 0.6% monthly, though weakness partly reflected lower gas prices and falling car sales. Analysts had expected 0.2% following June's 0.2% increase.

"The retail sales report came in much softer than expected," said Collin Martin, head of fixed income research and strategy at the Schwab Center for Financial Research (SCFR). "Combined with the relatively soft jobs report, it may make people worry about a softening economy, but one month doesn't make a trend. A look under the hood in the second quarter GDP report showed strong underlying growth."

Control group retail sales fell 0.4%, the worst showing since January 2025. The control group, which excludes auto dealers, building materials stores, and gas stations, is a measure closely watched by investors and used to help calculate gross domestic product (GDP).

"This makes a September rake hike less likely, but not completely off the table," Martin said. "Any upside surprises with August's inflation reports could make more Fed voters nervous."

The Atlanta Fed's third quarter GDPNow estimate fell sharply to 4.3% Friday after retail sales. This estimate is a so-called "now-cast," meaning it's constantly shaped by fresh data and could change dramatically before government estimates arrive in October.

Light retail sales followed tepid consumer and wholesale inflation figures earlier last week and a much weaker-than-expected July jobs report the week before.

In other data Friday, University of Michigan Consumer Sentiment disappointed at 51.0%, below the Briefing.com consensus of 54.5% and July's 55.2%. The report's long-term inflation expectation held at 3.3%, one positive takeaway, but consumer expectations fell, which could reflect wage and job worries.

The 10-year Treasury note yield remained near recent highs Friday at 4.7% despite weak data, lifted by rising oil and because some of last week's inflation readings feeding into the July Personal Consumption Expenditures (PCE) price index could make PCE relatively firm. PCE, due next week, is the Fed's favored inflation meter.

As of late Friday, odds of a Fed rate hike in September stood near 32%, down from 44% a week earlier following several soft data readings, according to the CME FedWatch Tool. However, odds of at least one hike by the end of the year reached about 67%.

"July CPI was broadly in line with expectations, reducing the immediate pressure for additional rate hikes," said Cooper Howard, director of fixed income research and strategy at SCFR. "However, inflation remains elevated, with core measures still well above the Fed’s target, keeping policymakers cautious."

"We continue to see risks that Treasury yields could move higher from here," Howard added, citing lingering uncertainty around the inflation outlook, the possibility that the economy’s neutral interest rate is higher than in the previous cycle, and persistent fiscal deficits.

Minutes from the last Federal Open Market Committee (FOMC) meeting arrive Wednesday afternoon and could bring more drama than usual considering three dissents at the gathering. Some dissenters spoke publicly last week, emphasizing the need for near-term hikes.

Turning to earnings, Home Depot takes the spotlight early tomorrow with shares on an impressive run since bottoming in mid-May. They're still well below the early 2026 peak, which occurred when market participants still anticipated rate cuts that might push down mortgage rates. Instead, there's now concern about rate hikes, and mortgage rates remain stubbornly high.

Earnings season is 90% over and has been impressive from a market-broadening perspective. In other words, the gains weren't solely from big tech firms but embraced every sector, other than health care. Most sector earnings rose double-digits. Of the 455 S&P companies reporting to date, 69% have beaten estimates on the top line while 87% have beaten on the bottom line, Bloomberg reported.

"Despite the potential risks related to the Iran conflict, this continues to be a market driven by strong earnings growth, which continues to be fueled by investment in the AI infrastructure buildout," said Nathan Peterson, director of derivatives research and strategy at SCFR.

On Friday, stocks didn't get much help from yields or oil, and the S&P 500 Index failed to re-test Thursday's record highs. For the full week, the index barely rose, though it was the third-straight weekly gain.

Semiconductor shares--on a roll since mid-July--slipped Friday and the PHLX Semiconductor Index remained below its 50-day moving average despite strength in memory and AI infrastructure companies.

Small caps closed higher for the fourth day in a row Friday.

Six of 11 S&P 500 sectors advanced Friday, but info tech finished second last, tripped by what appeared to be pre-weekend profit taking. Tech is up 4.4% over the last month, behind only energy and health care over that period.

Defensive sectors like utilities, staples, and real estate were among Friday's sector gainers, and generally outperformed growth over the last five sessions. This could indicate caution as earnings season winds down and the seasonally weakest time of year approaches. Still, the Cboe Volatility Index, or VIX, shows little sign of increased hedging, posting new lows for 2026 Friday below 14.30.

Gold rose slightly Friday as near-term rate hike odds fell on retail sales, and the weak data pressured the dollar.

Stocks moving Friday included Applied Materials sliding 5% despite results topping estimates and the semiconductor equipment company guiding above Wall Street's expectations. Disappointment could reflect the company taking a $220 million unrealized investment loss in its third quarter, Barron's noted.

Broadcom took a 6% spill Friday after two investment firms disclosed that they'd either exited the stock or lowered their positions, Briefing.com reported.

Reddit climbed 12.6% on news that the company's shares would be traded on the S&P 500 starting next week. Reddit replaces AvalonBay Communities, which is being acquired by Equity Residential, Barron's reported.

Sandisk surged 7.4% after JPMorgan Chase initiated coverage with an overweight rating, saying the company is "uniquely positioned" to benefit from the "structural inflection" in NAND demand driven by "rapid growth" in AI inference. This came after an upbeat meeting hosted by Sandisk earlier in the week.

Advanced Micro Devices rose 6% after a major private investor unveiled a new stock position, Briefing.com said.

The Dow Jones Industrial Average® ($DJI) fell 107.58 points (-0.20%) Friday to 53,732.41; the S&P 500 Index ($SPX) shed 13.23 points (-0.17%) to 7,785.76, and the Nasdaq Composite® ($COMP) lost 73.86 points (-0.28%) to 26,729.16.

Last week, the DJIA declined 0.56%,  the SPX rose 0.36%, and the Nasdaq gained 0.14%.