Fuel rises, crypto rallies, consumers pause

Every morning before the opening bell, the Schwab Market Update sets the stage for the day ahead, covering key market movers, economic developments, and emerging themes. Each edition includes "Three things to watch" while Thursdays feature a weekly section, "Crypto currents." This recap revisits select items for those who may have missed them, helping traders head into the weekend better informed.

Prices of oil and oil products have parted ways recently, with implications for inflation and the economy. Look at diesel, a key input to farming, freight transportation, and manufacturing. The wholesale diesel price is near all-time highs, up about 115% this year, while WTI oil is only about 54% higher and sits nearly 22% below its April highs. Last week, the spread between diesel futures and WTI oil futures hit an all-time high. The issue is refinery capacity, including at war-damaged facilities in Russia and the Persian Gulf. In July, diesel exports from Russia, the Middle East, and Asia dropped by the equivalent of about 20% of global seaborne trade compared to a year earlier, according to the International Energy Agency. Supplies are falling. U.S. diesel inventories have hit their lowest for this time of year in three decades, while gas supplies are at the lowest since 2012. Repairing damaged refineries will take time, and U.S. refineries are running above 95% capacity, so lower oil prices may not provide much immediate relief at gas and diesel pumps.

Bitcoin's 24% move last week—its biggest weekly gain in more than three years—was fueled partly by an extraordinary burst of short-covering. On August 19, the day the U.S. Treasury Department said it would expand its bond purchases to cap yields, short-covering hit the highest single-day total since at least 2019, according to data provider Glassnode. But investors also jumped into long positions. Last week saw the strongest single-week net inflows into spot bitcoin exchange-traded products (ETP) since October 2025, when bitcoin hit its current all-time high. But resistance sits just overhead. The true market mean, the average cost basis of all coins acquired on the secondary market, is about $81,000, about where bitcoin peaked earlier this week. Meanwhile, the average cost basis for ETP buyers is around $83,000, meaning the zone around that price is a break-even level for many investors who've been sitting on losing positions for months, and they may be tempted to get out. Bitcoin would likely have to get past these hurdles for the rally to keep going.

Though the key real personal spending measure in this week's gross domestic product (GDP) report rose 3.4%—revised up from the previous 3.2%—there's less there than meets the eye. First, real personal spending was flat in July, its worst month since January. This comes after consumer confidence earlier this week missed expectations. The surliness there might reflect trends underneath the numbers. Many companies have resorted to "shrinkflation"—charging the same amount for less product in a package—or have tinkered with ingredients to cheapen production costs, Bloomberg reported. This includes using higher percentages of water or changing from real cocoa to "chocolate flavor." Consumers are pushing back, forcing some companies to return to their original ingredients. But doing that means eating the margin hit or raising prices. Retailers reporting the last two weeks generally talked about consumer resilience, but there are exceptions, especially in the sportswear and athletic sectors. That said, it might be tougher to rework the innards of a shoe than a chocolate bar.

As earnings season winds down, S&P 500 companies are on pace to report quarterly earnings growth of roughly 50%, the strongest since 2021, with about 85% of companies beating analyst expectations. So why are we seeing so much churn in the market? Increasingly, companies need to beat the whisper numbers, the usually higher expectations of the buy-side analysts who put money in the market. While this gap between sell-side consensus and buy-side expectations has existed for a long time, for certain stocks it may be stretched a little too far in the current environment, said Liz Ann Sonders, chief investment strategist at the Schwab Center for Financial Research, or SCFR. Another possible explanation is that the market—always forward-looking—has started to question whether the extraordinary earnings growth at AI-related companies may be approaching an inflection point. "It's that rate of change, that change in direction that matters," Sonders said.

Gold and crypto shot higher after the U.S. Treasury Department said it would expand its bond purchases in an effort to contain longer-term yields, sending the dollar sharply lower. Treasury Secretary Scott Bessent doubled down the next day. Gold has risen 7% since the first announcement on August 19, while bitcoin is up 22%. So is the debasement trade back? "I think it's back on for now due to the U.S. Treasury Department's surprise intervention in the bond market," said Sonders, noting that it revived concerns about U.S. fiscal policy and its impact on the dollar. "Whether it's got legs to the same degree that it did previously, it's hard to say, but that's been a force behind why an asset class like gold has gone straight up to a four-week high."