SPX: absorbed tariffs

The US equity markets continue to be supported by positive market sentiment. The closely watched macro data during the previous week was July inflation, which was 0,2% for the month and fully in line with market estimates. It seems that for the moment, the US economy is ready to absorb the burden of increased trade tariffs and keep inflation within lower levels without too much oscillation. Such development is increasing market expectations that the Fed might cut interest rates in September. Although the index closed the week lower, still, during the week, the S&P 500 reached another all time highest level at 6.475 on Wednesday. The index closed the week at 6.449 on Friday. Analysts are noting that this correction occurred due to weaker consumer sentiment as posted by the University of Michigan on Friday. At the same time, inflation expectations for this year and for the period of next five years have modestly increased.
Considering a new ATH, some profit taking might occur during the week ahead, which could impact modest correction in index. However, considering continuous relatively stable inflation and strong demand posted during July, despite trade tariffs, analysts are noting that the market optimism will continue. For the week ahead, it should be also considered that a yearly Jackson Hole Economic Policy Symposium will be held 21-23 August, where Fed Chair Powell is expected to hold a speech. This event is both well covered by the media and closely watched by investors, looking for an indication of a potential future move on a monetary policy side.