The Dow Jones Industrial Average and S&P 500 scored record highs this week while the Nasdaq Composite posted its best weekly performance since April with a rise of more than 5%. Strong earnings, signs of AI monetization, and continued momentum in the services and manufacturing sectors offset a shocking jobs report which showed the economy shed -23K jobs in July. Looking ahead, market bulls look to push stocks higher on expectations for continued earnings growth in 2H 2026, a likely less hawkish Fed after the weak back to back jobs reports, and encouraging signs of easing Middle East tensions.
Key Highlights:
- The July nonfarm payrolls report shocked forecasters as the economy shed 23K jobs. That was well below analysts’ estimates of a gain of 83K. Meanwhile, June’s payroll gains were downwardly revised to just 20K. At the same time, the unemployment rate fell to 4.1% as the labor force participation rate declined to 61.4%, its lowest in more than five years. With new jobs hard to come by, worker pay also saw virtually no change during the month. Average hourly gains increased by just 2 cents, bringing the 12-month average down to 3.2%, below forecasts of 3.5%.
- Factory activity hit its fastest pace in more than four years in July. The ISM Manufacturing Index rose 2.6 points month-to-month to 55.6. Numbers above 50 indicate expansion while those below signal contraction. July’s reading marked the index’s best showing since May 2022. Strong gains in new export orders, backlogs, and imports drove the headline figure higher.
- The services sector held relatively steady in July. The ISM Services Index hit 54.1, up from June’s reading of 54. Growth in new orders, business activity, and imports helped push the index higher. Meanwhile, pricing pressures persisted with the prices-paid gauge rising 2.6 points to 70.3.
Earnings Boom and AI Tailwinds Push Stocks to New Highs
Stocks rallied in the first week of August trading to new record highs on strong earnings, signs of AI monetization, resilient growth amid a weak jobs market, and hopes for a deal to soon re-open the Strait of Hormuz. Thus far, it’s been a blockbuster Q2 2026 earnings season as corporate profits have crushed analyst estimates. Through August 5th, earnings are now forecasted to rise 49.60% for their best YOY growth rate since the Covid rebound of 2021. The gains have been broad-based with ten of the eleven S&P 500 sectors posting higher earnings growth. In economic news, investors cheer signs of resilient services and manufacturing sectors while dismissing the weak July payrolls report. The “bad news is good news” narrative dominated Wall Street on Friday as investors increasingly bet the Federal Reserve will hold off on hiking rates as jobs growth remains weak.
Markets wrapped up the banner week on Friday with all major indices closing higher on a strong earnings season and investors buying the recent tech dip. The recent rally has pushed the forward 12-month P/E to 20.3, close to the five-year average forward P/E of 21.32. In today’s world that’s considered reasonably valued but stocks could continue to move higher through year end. S&P 500 Earnings are expected to rise a very respectable 28.5% and 26% in Q3 2026 and Q4 2026 with growth expected across all eleven sectors. Signs of AI monetization could further bolster investor sentiment on surging cloud demand and enterprise adoption at hyperscalers Microsoft, Google, Amazon, and Meta. That suggests the AI story is in the early stages of having a positive impact on the economy. Throw in a less hawkish Fed, a deal to re-open the Strait of Hormuz which would ease supply chain pressures and lower prices, and consumers could be well positioned for the busy back to school and holiday shopping seasons. For the time being, it looks like the investment backdrop increasingly favors market bulls running to new highs.
The Week Ahead
Key reports include retail sales, CPI, and PPI.
Why a Clear Statement of Testamentary Intent Matters in Your Estate Plan
Our advisors often counsel estate planning clients to include a statement of testamentary intent with their estate planning documents. This is a specific clause or a series of formal declarations attached to and kept with a Last Will and Testament or a Revocable Living Trust. Its purpose is to provide proof that the individual was of sound mind and memory, acting of their own free will, and that they intend the specific document to be their final word on their estate and the management and distribution of assets according to their wishes. It may include language that all previous versions of a will are now void which prevents old documents from being confused with a newer one.
Life changes — such as marriage, divorce, the birth of a child or grandchild, a significant change in assets, or the death of a beneficiary — may require revisions to an estate plan. Families may encounter uncertainty when multiple documents, handwritten notes, or verbal wishes exist. A clear statement of intent helps identify which document represents your final, legally meaningful instructions, particularly when updates or changes have been made.
A statement of testamentary intent or a letter of intent may also be helpful in the event that a legal challenge is made against a deceased person’s estate by a relative or dependent who feels the deceased failed to adequately provide for them. It can show that the deceased deliberately considered and made decisions about who should inherit and why and provide evidence to the court that the estate plan reflects their genuine wishes, was made voluntarily, and was not the result of oversight.
In more modern or holistic estate plans, some of our clients include a Letter of Intent or a Memorandum of Wishes with their estate planning documents. This is a separate, less formal letter written in plain English that sits alongside the legal documents. These may be used to explain the reasoning behind why an individual may have chosen to distribute assets to their children in unequal shares or to possibly exclude an individual from their will. In some cases, an individual may have already provided significant prior financial assistance or property to a child or other beneficiary during their lifetime. Alternatively, someone may choose to exclude a child or beneficiary who may be financially stable while other beneficiaries may need more support.
Another valuable role that a Letter of Testamentary Intent plays is that of transferring intellectual capital to future generations. Wealth isn’t just financial capital. Clients who are successful at transferring the intellectual capital that helped the family create the fiscal wealth in the first place are far more likely to succeed at perpetuating their wealth across multiple future generations. Otherwise…”shirtsleeves to shirtsleeves in three generations” becomes the general rule.
Because these statements are part of a primary estate plan, they should be maintained with estate planning documents in a place that is secure and accessible to the estate’s executor or successor trustee. Families and individuals should work with experienced and qualified estate planning professionals to prepare, execute, and periodically review documents. This includes ensuring that beneficiary designations, account titling, insurance policies, retirement accounts, and investment assets align with the goals expressed in your estate plan. Perhaps most importantly, our advisors encourage clients to hold family meetings with loved ones during their lifetime to communicate their wishes, manage expectations, and help minimize misunderstandings or potential disputes later.