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August 31, 2026
Good afternoon,
Markets
For the week ending 8/28/2026:
- The S&P 500 increased 0.5% to close at 7,711.76.
- The yield of the 10-year Treasury bond decreased from 4.74% to 4.72%.
- Oil decreased from $87.06 to $83.40.
- The CBOE Volatility Index (VIX) decreased from 15.13 to 14.43.
- U.S. dollar currency exchange rates were:
- EUR/USD: 1.16 (USD stronger from a week ago)
- GBP/USD: 1.36 (USD stronger from a week ago)
- USD/JPY: 159.32 (USD stronger from a week ago)
Market Headlines
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Inflation Remains Elevated: On Wednesday, the Personal Consumption Expenditures (PCE) report showed that the price index rose 0.2% in July, bringing the year-over-year rate to 3.7%, slightly above economists’ expectations. Core PCE, which excludes food and energy, held steady at 3.3% year-over-year. The report provided another indication that inflation remains well above the Federal Reserve’s 2% target, reinforcing concerns that persistent price pressures could make it more difficult for the Fed to ease monetary policy in the near term.
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Hawkish Fed: Fed Chair Kevin Warsh signaled that the Fed could raise interest rates in September if inflation fails to make sufficient progress toward the Fed’s 2% target. During a speech on Friday, Warsh emphasized that the Fed’s predominant focus must remain on price stability. While he acknowledged that recent inflation readings have been better than expected, he made clear that they have not yet provided enough evidence that underlying inflation is on a definitive path back toward the Fed’s 2% target.
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Strong Tech Earnings: NVIDIA’s highly anticipated Q2 earnings report provided investors with further evidence that the AI investment boom remains strong and could continue for years. NVIDIA reported $96.2 billion in quarterly revenue, up 106% from a year earlier and roughly 4.5% above analysts’ expectations. However, it was the company’s longer-term outlook that captured investors’ attention. NVIDIA projected approximately 70% revenue growth for fiscal 2028, far exceeding Wall Street’s expectations, as demand for AI infrastructure continues to expand.
Key Takeaway
With inflation remaining elevated, investors are closely watching upcoming inflation and employment data for signs of whether a September rate hike becomes necessary. During a speech Friday morning at the annual economic symposium in Jackson Hole, Fed Chair Kevin Warsh emphasized that inflation remains a significant risk and that recent progress has not been sufficient to ensure inflation is moving toward the Fed’s 2% target. Warsh stated that the Fed “must be confident that underlying inflation is moving to our objective, clearly and at sufficient speed. Otherwise, we have work to do.” While he did not signal a specific rate decision for September, his comments left the door open to another rate hike, pushing market-implied odds of a September increase from roughly 35% to nearly 60% following the speech. Warsh also pointed to continued business investment (particularly spending related to AI infrastructure), steady consumer spending and stable labor market conditions as signs that the U.S. economy remains resilient. With economic activity holding up despite elevated interest rates, the Fed may have greater flexibility to keep rates higher or raise them further if inflation remains elevated.
The Week Ahead: August 31 – September 4
- Monday: No major reports scheduled
- Tuesday: U.S. manufacturing PMI, Job openings
- Wednesday: ADP employment report, Factory orders
- Thursday: Initial jobless claims, U.S. trade balance, U.S. services PMI
- Friday: Jobs report
Until next week,
Weller Financial Group
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