Here is Schwab's early look at the markets for Wednesday, August 19:

Minutes from the Federal Reserve's last meeting arrive later today with the market at a crossroads. The long summer rally ran into a buzzsaw of climbing yields and oil this week that it could no longer ignore, mainly because there's no sign of progress in the Middle East as the ceasefire ends.

Weakness accelerated Tuesday as yields and oil kept spinning higher, raising borrowing costs for companies and investors. Chips took the brunt of the blow. The 30-year bond yield hit a 19-year high while the 10-year yield approached highs last hit in early 2025. The 2023 high of almost 5% isn't far off.

While stocks staged long rallies in the 1990's with yields at these levels, it generally was accompanied by cheap crude. Today's combination could be a tougher challenge, raising the cost of borrowing and energy at the same time. This has implications for heavy-spending growth companies and for consumer spending, which accounts for 70% of gross domestic product (GDP). Next week's update on second quarter spending and growth could be useful , though oil prices and yields were generally lower then compared to now.

Also, minutes, due at 2 p.m. ET, reflect conditions when the Fed met in late July, several weeks before the ceasefire expired and when there was more hope of an end to the war. That could have affected the debate. Three policymakers voted to raise rates and nine voted to leave them unchanged.

Weak July jobs and retail sales data seemed to temporarily discourage market participants from expecting a September hike, with chances for one that month recently below 35%, according to the CME FedWatch Tool. Hike chances accelerate from there to almost 70% by year end. 
Rising U.S. yields also could draw investors toward bonds and away from stocks thanks to what might be perceived as enticing returns.

Bond yields and stocks now have the most negative correlation since 1997, meaning when one goes up the other goes down. This implies that the bond market is keying more off inflation data than growth data, giving inflation the upper hand when it comes to equities, said Kevin Gordon, head of macro research and strategy at the Schwab Center for Financial Research (SCFR).

The long stock rally this summer took place when market participants seemed relatively sure the war would soon end. Now that's unclear and could explain recent stumbles.

Rising yields partially reflect rising oil prices, which climbed 0.5% Tuesday to nearly $85 per barrel. There's growing concern about falling strategic reserves, which countries might eventually need to refill. That kind of demand would compete with normal transportation and heating needs, keeping prices up for longer.

Still, longer-term oil futures trade below spot prices. The market anticipates U.S. crude to fall below $79 per barrel by next winter, though that could reflect traditionally weaker winter demand. There's no sign of progress re-opening the Strait of Hormuz and only one ship made the transit in the 24 hours before Tuesday's market close, strait monitors said.

Amid all the hand wringing over yields and oil, this week is big for retailers and it started with good news Tuesday from Home Depot.

Home Depot's earnings and revenue topped consensus even as executives said customers mostly avoided large do-it-yourself purchases. The company reaffirmed its fiscal 2027 earnings and revenue guidance, easing minds. Lowes and Target report today, and Walmart comes to bat tomorrow.

In another home-related development, July housing starts and building permits data looked mixed. Permits—a leading economic indicator—rose 5% monthly,  topping estimates at a seasonally adjusted annual rate of 1.44 million. Starts missed consensus at 1.24 million. The relatively weak data helped ease Treasury yields from early peaks Tuesday.

In other data, industrial production rose 0.2% monthly in July, short of the 0.3% Briefing.com consensus.

Target and Lowe's both report this morning, with Lowe's likely now expected to impress after Home Depot's solid outing. Target spent most of the year rallying, though it put on the brakes after last week's poor U.S. July retail sales report. Concerns about possible consumer caution put Target and Walmart in the spotlight, with Walmart reporting Thursday morning.

Consensus for Target is $2.33 per share on revenue of $26.1 billion, up 3.7% year over year. Target beat estimates last time and sales at stores open a year or more--which had slumped--rebounded an impressive 5.6% annually. Growth was strong across most categories and customer traffic rose. This puts pressure on Target to share similarly impressive results today.

The solid results from Home Depot appeared to help consumer sectors including staples and discretionary. Credit card, pet supply, athletic gear, and soft drink companies were among the leaders on Wall Street Tuesday.

Major indexes kept retreating from last week's record highs Tuesday, burdened by rising yields and oil and ending not far off their lows. In other words, the same story as Monday. High yields are particularly bearish for tech and small-cap firms that tend to rely more on borrowing. They're bad for consumer-focused firms like home builders and airlines, too, while transport firms also grapple with rising fuel costs.

Four of 11 S&P sectors gained Tuesday, a far better showing than one of 11 on Monday. Health care and staples were two of the top three, along with energy, showing investors in a more defensive posture. Tech finished last as Monday's semiconductor rally fell apart. The S&P 500 Index is now down three straight sessions.

Technically, support could be at 7,620 for the S&P 500 Index, near the old June high that got eclipsed earlier this month. Tuesday's failure to hold 7,700 could hurt from a chart perspective.

Stocks moving Tuesday included memory chip makers SK Hynix, Micron, Sandisk, and Western Digital down 7% to 9%. There's concern rising borrowing costs could hurt companies trying to build data centers, weighing on chip demand.

Chip and cloud infrastructure firms also struggled, including CoreWeave, Marvell Technology, and Lumentum. The PHLX Semiconductor Index had its worst day in a while, falling 5% as Intel fell 6.6%.

Fabrinet plunged 19% despite strong earnings and guidance. Investors appeared concerned about what the company said might be a temporary margin headwind, CNBC reported. The optical manufacturing company's struggles today appeared to spill into trading of other chip infrastructure firms.

Caterpillar fell 4.5%, hurt by worries about AI data center and chip demand. Much of its long rally reflects construction strength related to AI.

Software, which often trades opposite of chips, kept that reputation Tuesday. Shares of Salesforce rose almost 3% and Adobe rose 3.6%.

Apple climbed 1.4% after lowering App Store fees in Europe to settle a dispute with the European Union, according to Bloomberg.

Meta Platforms fell 4.4%. It faces a trial in federal court that could bring as much as $1.4 trillion in penalties amid claims it deliberately designed its products to encourage compulsive use among youngsters, Bloomberg reported.

Eli Lilly rose 3.5% to place among healthcare leaders along with Johnson & Johnson. Biotech stocks had a decent day, too.

The Dow Jones Industrial Average® ($DJI) lost 116.38 points (-0.22%) Tuesday to 53,343.40; the S&P 500 Index ($SPX) fell 53.30 points (-0.69%) to 7,691.76, and the Nasdaq Composite® ($COMP) gave back 355.20 points (-1.33%) to 26,289.71.