US Stock Market Alert: Will Dow Jones, Nasdaq, S&P 500 Hit New Highs Ahead Of Fed Minutes; Investors Strategy

The US stock market is expected to start the week moderately bullish; however, risk tailwinds persist and could not be ignored. August is historically seen as a bearish month for Wall Street, but so far the Dow Jones, Nasdaq, and S&P 500 have managed to stay afloat above the red zone. This week, the US Federal Reserve's minutes of meeting will be eyed to understand the movement of federal fund rates in the upcoming policy. Last week, Wall Street ended mixed as investors booked profits from record gains in the indices. What should be investors' strategy this week?

US Stock Market: Key Factors To Focus On This Week

The Fed will release the July policy minutes of the meeting on August 19, 2026, which will be the second round under chair Kevin Warsh. In July, the FOMC decided to keep federal fund rates unchanged for the fifth time in a row, at 3.50% to 3.75%. However, in the latest policy, there was a clear dissent between Fed members. Three of them voted for a 25 basis points rate hike, which opens the possibility that the Fed might hike the rate anytime in 2026 due to inflationary pressure arising from the West Asia conflict.

Here's what we know so far: US inflation cooled to 3.4% in July, but consumer sentiments and retail sales weakened. Also, the US economy stunned with 23,000 job losses in July, far worse than the street expectation of an 80,000 increase. Meanwhile, the unemployment rate is at 4.1%.

Following this, investors believe there is a one-in-three chance of a Fed rate hike in the upcoming policy.

Aside from Fed minutes, investors will also focus on some of the major retailers' earnings, which will offer new clues to the health of the US economy.

As per Trading Economics, Home Depot is set to report on Tuesday, followed by Lowe's on Wednesday and Walmart on Thursday. On the economic front, investors will scrutinize the Federal Reserve's latest meeting minutes on Wednesday after subdued US inflation data last week prompted traders to scale back expectations for a rate hike in September. Meanwhile, the S&P 500 and Nasdaq Composite are coming off three consecutive weekly gains, with the former hovering near record highs. A strong earnings season has supported Wall Street despite geopolitical uncertainties in the Middle East and lingering concerns surrounding the artificial intelligence trade.

What Should Be Investors' Strategy on Wall Street?

"While inflation has moderated, the path back to the Fed's target may not be perfectly smooth. That uncertainty reinforces the value of maintaining a diversified portfolio over making concentrated bets on any one inflation scenario," said Tom Larm, Strategist, Investment Strategy at Edward Jones in a note.

The strategist believes equities serve as a cornerstone for that strategy, offering long-term growth potential to help preserve purchasing power, providing a level of inflation protection over time, despite the potential for periodic market volatility along the way.

Hence, he recommends that rather than positioning for a single market outcome, emphasize diversification with an opportunistic lean toward stocks.

Given a constructive economic backdrop, Larm added, "we favor an overweight to a diversified mix of U.S. and international equities to help capture opportunities linked to both AI-driven innovation and broader economic growth."

Last week, on August 14th, Wall Street broadly witnessed selling pressure. The Dow Jones closed at 53,732.41, underperforming counterparts by posting 107.58 points or 0.20% decline. The Nasdaq Composite index closed at 26,729.16, lower by 73.86 points or 0.3%. Lastly, the S&P 500 ended at 7,785.76, down by 13.23 points or 0.2%.

However, for the overall trading week between August 9th and 14th, DJIA posted 0.63% or 340.25-point weekly drop. On the other hand, Nasdaq recorded 48.72 points or 0.18% weekly gains and S&P 500 surged by 34.02 points or 0.44%.

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