August 24, 2026

“Price is what you pay. Value is what you get.”

Warren Buffett

US equities finished lower for the week, snapping recent winning streaks for the S&P 500 and Nasdaq as rising Treasury yields and Middle East tensions weighed on sentiment, though stocks managed a solid rebound on Friday. Here are the numbers, the S&P 500 finished down 1.43%. the Dow Jones Industrial Average lost .85%, the Nasdaq lost 2.05% Internationally, the FTSE 100 managed a gain of .41% and the MSCI-EAFE was off about .58%. the 2-Year treasury paid 4.23% and the 10-Year yield was 4.73%

So, what happened?

A sharp rise in longer-dated Treasury yields (the 30-year briefly touched levels not seen since 2007) and climbing oil prices tied to ongoing Middle East / Iran tensions pressured stocks for most of the week. Investors grew concerned that higher energy costs could keep inflation stickier and that elevated yields raise the cost of capital. The S&P 500 closed Friday at 7,674.37 after dropping more than 1% earlier in the week; it finished off roughly 111 points for the period and snapped a three-week winning streak. The index remains about 1.6% below its record close of 7,798.99 set the prior Thursday. The Dow Jones Industrial Average closed at 53,277.01 (down about 455 points on the week) for a second consecutive weekly decline, while the Nasdaq Composite finished at 26,180.46. Small-caps (Russell 2000) dropped about 1.65%. Friday’s session brought a welcome bounce—Dow up nearly 518 points—after stronger-than-expected US business activity data (especially services) and some relief from Treasury Secretary Bessent’s comments on increased bond buybacks. Energy stocks saw volatility linked to oil swings, while tech and growth names were hit hardest by the yield spike. Year-to-date the S&P 500 is still up roughly 12.1%, the Dow about 10.9%, and the Nasdaq around 12.6%.

Overseas,

Global equities also felt the pressure from higher US yields and oil prices, though performance was mixed by region. Asia-Pacific: Japan’s Nikkei fell sharply (roughly 4% for the week, one of its bigger declines in recent months). South Korea and Taiwan were softer as well. Hong Kong’s Hang Seng bucked the trend with a solid gain of about 2.4–3.5% for the week, snapping a short losing streak.

Chinese mainland markets were mixed to modestly higher. In Europe: The STOXX Europe 600 finished the week lower (around 0.5–1%), extending losses, while Germany’s DAX dropped about 1.15% and France’s CAC also declined. The FTSE 100 managed a modest weekly advance. Many markets had been near records earlier in the month; the pullback reflected the same yield and geopolitics concerns that hit the US. Which is why we still like foreign stocks for the long-term diversification and relative valuations.

What’s the FED up to?

Federal Reserve’s target range for the federal funds rate remained unchanged at 3.50%–3.75% (effective rate around 3.63%). There was no FOMC meeting during the week; the next is scheduled for September 15–16. Minutes from the July meeting were released Wednesday and confirmed a divided committee that left rates on hold, with some members already leaning toward the need for higher rates to address inflation risks. Soft data earlier in the summer had reduced near-term hike odds, but the recent jump in oil and long yields has markets watching carefully. The Jackson Hole Economic Policy Symposium (August 27–29) is next week, with Chairman Kevin Warsh scheduled to deliver keynote remarks—markets will be listening closely for any signal on the path ahead.

In Economic news,

The week featured a mix of housing, industrial, and survey data plus the FOMC minutes. July Housing Starts (Tuesday) fell more than expected to a seasonally adjusted annual rate of 1.239 million units (down sharply from the prior month’s revised 1.415 million). Building permits rose to 1.443 million. Pending home sales for July declined 2.3% month-over-month. Industrial production edged up 0.2% in July while capacity utilization held at 76.3%. Regional surveys were stronger: Empire State Manufacturing jumped to 20.6 in August and the Philadelphia Fed Manufacturing survey rose to a robust 47.4. Initial jobless claims remained low at 206,000. Friday’s flash S&P Global PMIs showed manufacturing at 53.2 (slightly softer) but services at a strong 56.8—the best reading in some time—and the composite at 56.0. Overall the data pointed to resilient private-sector activity even as housing remains constrained by rates and affordability.

In the housing market and mortgage rates news.

July Existing-Home Sales (reported earlier) had already shown a 1.7% month-over-month decline to a seasonally adjusted annual rate of 4.06 million units (still up 0.7% year-over-year). Median existing-home price was $434,100 (+2.0% YoY). Inventory stood at about 1.54 million units (4.6 months’ supply). Mortgage rates edged lower again this week. Freddie Mac’s Primary Mortgage Market Survey for the week ending August 20 showed the average 30-year fixed rate at 6.65% (down 2 basis points from the prior week) and the 15-year fixed at 5.95%. Rates remain elevated versus recent years and continue to constrain affordability, though the two consecutive weekly declines provide modest relief. MBA mortgage applications data earlier in the week showed mixed but still rate-sensitive activity. Overall, the housing market remains stable but soft; sales are holding near year-ago levels and prices continue to rise modestly, yet elevated borrowing costs and limited inventory keep a stronger recovery at bay. Demand responds quickly when rates ease even a little.

So, in summary,

As mentioned last week, Wall Street’s consensus for the remainder of 2026 continues to lean moderately constructive on US equities. Most major forecasts still look for the S&P 500 to grind higher into year-end, supported by solid corporate earnings growth (particularly AI-related investment and infrastructure) and an economy that is cooling but not breaking. Typical year-end targets imply another 4–8% upside from current levels, assuming inflation does not re-accelerate meaningfully. That said, the near-term risks are clear and elevated: sticky inflation if oil prices stay high, the possibility that long-term yields remain elevated and keep pressure on valuations, and the unresolved situation in the Middle East. We share the positive longer-term view, but the next couple of weeks will matter—Jackson Hole remarks from Chairman Warsh, and a heavy slate of big-tech earnings (starting with Nvidia) will set the tone. We still believe a genuine de-escalation in the Iranian conflict that allows freer oil flows and pulls energy prices lower, will make us more bullish in a hurry. Until then we stay balanced and selective.

Mike