Financial insights for the week ending August 7, 2026
Markets finished higher for a second straight week, with the S&P 500 gaining 3.6%, the Dow adding 3.0%, and the Nasdaq climbing 5.2%, and the Russell 2000 ending up 3.5%.
The week belonged to the Iran conflict again, at least until Friday morning. Cancelled strikes and word of renewed negotiations had markets in rally mode right out of the gate Monday. Treasury Secretary Bessent added fuel Tuesday by suggesting a deal to reopen the Strait of Hormuz could come within days, however Iran then circulated proposals Thursday that would bar American and Israeli ships from the strait. Then came Friday's jobs report, and it surprised nearly everyone. The economy shed 23,000 jobs in July. Expectations were for a gain of roughly 80,000, so the miss was large, and the prior two months were revised down by a combined 103,000 on top of it. The unemployment rate fell to 4.1%, which sounds fine until the data showed why. Participation dropped to 61.4%, a level not seen in over five years, meaning fewer people are looking for work at all. The market's read was simple, weak jobs make a rate cut more likely, so stocks rallied on a bad number. One more item after last week's rotation discussion, the chip stocks everyone was selling in July came back strong, up better than 5% on the week.
Next week looks to be the making of the summer quiet season, though it comes with two inflation checkpoints. July CPI comes in Wednesday morning and producer prices follow Thursday. Both will capture some of the energy cost swings the conflict has been injecting into the economy. After Friday's soft jobs number, inflation becomes the other half of the Fed's equation. A cool print would help settle the hike vs. cut debate that split the committee last month. A hot one throws more speculation on an already contested debate. Beyond those two reports the calendar thins out considerably. We would not read much into any single day's move between now and Labor Day.
This week's tip is less of a task and more of a planning idea: it's time to start thinking about Roth conversions. A Roth conversion moves money from a traditional IRA into a Roth IRA, and you pay ordinary income tax on the converted amount now in exchange for tax-free growth and tax-free withdrawals later. Simple mechanics, harder judgment call. Whether the trade works depends on your bracket today versus your expected bracket in retirement, and on how the conversion income stacks against everything else landing on your return this year, which is exactly why the back half of the year is when we run this analysis for our clients. Conversions must be completed by December 31st. Rushed December decisions rarely work out in your favor. If you've wondered whether a conversion fits your situation, bring it up at your next review meeting and we'll look at it together. People are often surprised how much a few conversions can save over the course of a retirement!
Enjoy your day! Come back next Saturday for our latest commentary. We are here to answer any of your financial questions.