Stock markets and traders are breathing a sigh of relief after benign U.S. inflation data. But there’s no time to relax. Oil prices could still spring a nasty surprise as consumers feel the pinch of higher prices. 

Coming into the week, the big question was whether hot inflation would force the Federal Reserve into hiking interest rates at its September meeting. Relatively moderate consumer and producer price index readings have led traders to scale back that bet. The market is now pricing in only a 30% chance of a September rate hike, according to the CME FedWatch tool, down from around 45% a week ago. 

Investors took the moderating inflation data as a signal to pile into equities, sending the S&P 500 to yet another new high. South Korea’s KOSPI Composite Index—a bellwether for the AI trade due to the heavy presence of memory-chip stocks—has roared back into a technical bull market, defined as a 20% rise from a recent low.  

But it might still be a bit too early to declare victory over inflationary pressures. There’s still one big, sticky, foul-smelling obstacle—oil. Although crude prices snapped a six-day streak of rises Thursday, energy costs remain elevated, and there’s no sign of an end to Middle East tensions. Some monetary policymakers are still worried about prices climbing. Cleveland Fed President Beth Hammack—one of the dissenters at the central bank’s July meeting who wanted higher interest rates—repeated her call for the Fed to tackle inflation. 

For further evidence on how oil prices and other costs are affecting the consumer, watch the coming earnings next week from retailers including Target, Home Depot, and Lowe’s. If they call out weak spending, markets might have to rethink just how controlled inflation really is.

—Adam Clark

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In another case of not living up to Wall Street’s lofty expectations, Applied Materials reported solid earnings but gave a better-than-expected forecast that didn’t excite. The company benefits from ballooning AI spending on processors and memory chips, but that meant it had a high bar to clear.

• Applied Materials reported third-quarter adjusted earnings of $3.50 a share for the quarter and a 25% jump in revenue to $9.12 billion. It expects fourth-quarter revenue of $10.25 billion at the midpoint and adjusted earnings of $4.02 a share, above estimates for $9.55 billion and $3.71 a share.

• The results come on the heels of strong quarterly reports from close rivals KLA Corp. and Lam Research. The trio are jostling for market share in areas like dynamic random access memory, or DRAM, where capacity will likely expand in the coming years thanks to AI.

• DRAM accounted for 26% of semiconductor systems revenue in the third quarter, up from 22% a year ago. Foundry and logic equipment continue to make up the bulk of Applied Materials’ systems business. For the fourth quarter, Applied Materials forecasts semiconductor systems revenue of $7.9 billion, up 62%.

• Separately, memory supplier Sandisk dispelled worries about a slowdown in the memory market with an ambitious long-term growth plan. It said during its investor day that revenue should rise by mid- to high-teen percentages annually between fiscal years 2028 and 2030.

What’s Next: Sandisk also forecast adjusted gross margins to stabilize at around 80% during that period, with an adjusted free-cash-flow margin of about 50%. Sandisk plans to return all excess cash to shareholders after investing in the business, said CFO Luis Visoso.

—Nate Wolf

The U.S. will use artificial intelligence to help stop the practice of shipping goods through an intermediary country—something called transshipping—that evades tariffs. Top White House trade advisor Peter Navarro said the plan wasn’t about “going after China,” but rather “its enablers.”

• Navarro outlined the move in a 10,000-word report with an image of a Trojan Horse—the wooden vessel the Greeks hid in for the Battle of Troy in Virgil’s Aeneid. Transshipments became more prevalent after 2018, when the first Trump administration imposed Section 301 tariffs on China, the report said.

• Potentially illegal transshipments may have cost the U.S. about $60 billion in tariff revenue last year, according to a rounded midpoint of estimates by the White House Council of Economic Advisers. The U.S. has deals with some southeast Asian nations that impose higher tariffs if they allow transshipments.

• Because the complexity of supply chains makes it difficult to track goods, the Trump administration plans to increase monitoring and enforcement with what it calls an AI-enabled Detective Border. The tool will analyze global trade data.

• Navaro told reporters that the transshipments crackdown isn’t about China. “It isn’t about going after China because China is going to be China,” Navarro said. Instead, Navarro said, transshipments are about where China’s goods are passing through, or “enablers.”

What’s Next: The U.S. wants to reinstitute the global tariffs with new levies. Henrietta Treyz, head of economic policy research at Veda Partners, said the administration is frustrated about tariff avoidance and the announced push could be an alternative to a stand-alone Section 301 investigation related to transshipments.

—Reshma Kapadia, George Glover, and Liz Moyer

The shipping world is in chaos, and not just because of the Iran war and the Strait of Hormuz closure. Two of the world’s largest shipping companies, Denmark’s A.P. Moeller-Maersk and Germany’s Hapag-Lloyd, are signaling that higher prices are on the horizon. The effects could wash over big U.S. companies.

• Maersk CEO Vincent Clerc said that from ports to inland transportation, Maersk is seeing increased congestion and disruption across multiple geographies. Strong, broad-based demand from East Asia has led to significantly more unbalanced trade flows.

• Hapag-Lloyd’s second quarter was driven by “significantly higher spot rates and robust demand,” CEO Rolf Habben Jansen said. Asian ports like Shanghai are struggling to meet demand. In the second half of 2026, Hapag-Lloyd is focused on growing its liner shipping and terminal businesses.

• Shipping isn’t just shipping. As the Strait of Hormuz closure made clear for oil and other commodities, logistical snags have ripple effects felt far beyond the shoreline. The SonicShares Global Shipping ETF has rallied 44% this year amid shipping disruptions. 

• Higher shipping prices and delivery delays could boost air freighters like FedEx and UPS, while freight forwarders such as Expediters International of Washington and C.H. Robinson Worldwide could see expanded margins.

What’s Next: Auto makers like Ford, GM, and Tesla rely on fast-changing global supply chains for parts and logistics for export help. If capacity constraints cause delays, retailers such as Walmart and Target might boost inventory before the holidays, which could raise warehousing costs and shave profit margins.

—Jack Denton and Janet H. Cho

Investor Bill Ackman has added new stakes in Visa, Mastercard, and Netflix shares across the portfolios he manages. At the same time the investment manager has exited a position in Hertz Global after the vehicle rental company did what Pershing believed to be an unnecessary equity offering.

• Ackman, whose investment performance has been hit by declines in Meta Platforms and Howard Hughes, is reporting the changes since his Pershing Square USA closed-end fund went public in late April. Three other new holdings are Intercontinental Exchange, Alcon, and S&P Global.

• In Netflix, Ackman is returning to an investment he once held in 2022, but only briefly. Back then he exited at a loss of about $400 million, citing a “loss of confidence.” Now, Netflix has “effectively won the streaming wars,” Ackman’s letter to shareholders says. 

• Pershing’s Chief Investment Officer Ryan Israel said about the Hertz stake, which was relatively small to begin with, that they exited it after the company unveiled an equity offering Pershing described as “bungled” and “unlike anything we’d seen a company do before.”

• Pershing Square USA, which raised $5 billion in its initial public offering, has seen its net asset value increase 0.6% through Aug. 11 relative to its $50 a share IPO price, against the S&P 500’s roughly 9% return. Ackman called the disappointing performance “frankly absurd.”

What’s Next: Pershing Square USA trades at a 20% discount to net asset value. Ackman told Pershing Square USA holders that an “active marketing program” would narrow the discount, saying that PSUS represents “an extraordinary bargain” at the currently large discount to NAV.

—Andrew Bary and Janet H. Cho