Stocks Struggle for Direction as Fed, Consumer Strength Dominate Market Focus

U.S. stocks ended Monday’s session little changed, as investors weighed resilient consumer savings, looming Federal Reserve policy decisions, and an upcoming retail earnings test from Home Depot.

The Dow Jones Industrial Average slipped 33.93 points, or 0.08%, to 44,912.2. The S&P 500 eased 0.64 point, or 0.01%, to 6,449.16, while the Nasdaq Composite edged up 6.80 points, or 0.03%, to 21,629.8.

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Market sentiment was shaped by new data from Bank of America Institute, which showed household checking and savings balances remain above pre-pandemic, inflation-adjusted levels.

“These elevated deposits likely provide some extra cushion for consumers, helping to support their spending,” the Institute said in a report dated August 18, 2025. Analysts say such buffers could help sustain discretionary demand even as borrowing costs remain restrictive.

The week ahead is dominated by central bank news. Investors are looking to Federal Reserve Chair Jerome Powell’s keynote at Jackson Hole on Friday for guidance on the path of interest rates. According to a preview from the Kansas City Fed symposium, Powell will address “labor market weakness and inflation risks.” While futures markets put the probability of a quarter-point September rate cut above 80%, Powell may avoid a firm commitment amid “sticky inflation, tariffs, and political pressures from Trump”.

The political backdrop adds volatility. President Trump has urged the Fed to accelerate easing, while tariffs enacted earlier this month continue to ripple through supply chains. Inflation gauges have moderated but remain sensitive to trade policy, complicating the Fed’s calculus.

On the corporate front, Home Depot is set to report quarterly results Tuesday before the opening bell, offering one of the clearest reads on consumer health and housing trends. Consensus forecasts call for $45.5 billion in revenue and $4.71 in earnings per share, with analysts focused on comparable sales growth, gross margins, and tariff commentary. Stifel and Citi have highlighted Home Depot’s relative strength in the Pro contractor segment, even as DIY weakness and integration costs pose headwinds.

Commodities offered mixed signals. Gold futures for December delivery settled at $3,376.50, down 0.18%, while Crude Oil September contracts rose 0.73% to $63.26.

With equities near record levels and valuations stretched, investors remain cautious ahead of Powell’s speech and a pivotal week of earnings. For now, the market’s tight trading range reflects the balance between resilient consumer fundamentals and persistent policy uncertainty.

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