September 14, 2026

“Don’t look for the needle in the haystack. Just buy the haystack.”

John C. Bogle

US equities finished lower for a holiday-shortened week, even after a Friday bounce that snapped a four-day losing streak. Oil crossing $100, hotter producer prices, and a firm August CPI print pushed September Fed hike odds toward a near-certainty and sent Treasury yields higher. A mid-Friday pullback in crude gave stocks room to recover, but not enough to erase the weekly damage.

Here are the numbers: the S&P 500 finished down 0.80%, the Dow Jones Industrial Average lost 1.57%, and the Nasdaq lost 0.66%. Internationally, the FTSE 100 fell 1.67% and the MSCI EAFE was off about 1.4%. The 2-Year Treasury paid 4.63% and the 10-Year yield was 4.96%.

So, what happened?

It was a four-session week after the Labor Day close. Markets opened Tuesday already digesting a weekend escalation in the US-Iran fight — including reported US strikes on Iranian tankers after IRGC attacks on a US warship — and WTI quickly worked back through $90 and then $100. Stocks sold Monday through Thursday as crude tested nearly $110 on Brent and long-term yields marked multi-year highs. Small caps took the brunt of it.

Thursday’s Producer Price Index rose 0.4% for August, matching the headline consensus but lifting the year-over-year rate to 5.4% from 4.8%. Energy did a lot of the work. Diesel soared, and traders are expecting a September hike with the odds increasing from the mid-60s into the low 70s. Friday’s CPI then did the rest: headline +0.4% month-over-month and +3.4% year-over-year, with core +0.3% / +2.4%. Gasoline was up 3.9% on the month and accounted for more than a third of the monthly increase. Core year-over-year is the softest in years, but the monthly print was sticky enough that CME FedWatch odds of a 25-basis-point hike on September 16 moved into the mid-to-high 80s, near 90% after the report.

Equities still rallied last Friday. Oil eased a bit when WTI settled around $100.05, down about 2.4% on the day after touching $100-plus; Brent closed at $104.61, down about 2.8% after tagging nearly $110 overnight. Hardware names jumped after Oracle’s results: cloud backlog of $664 billion and a beat that eased some of the “AI capex running ahead of demand” worry. Dell hit a record; HPE and HP both jumped double digits. The Dow added about 509 points Friday, the S&P 500 0.86% to 7,656.98, and the Nasdaq 0.96% to 26,333.04. That still left the S&P down 0.8% on the week, the Nasdaq down 0.7%, and the Dow down about 1.6% the worst week since early March. The S&P closed about 1.8% below its August 13 record of 7,798.99. The Russell 2000 lagged, finishing around 2,904, down roughly 2.4% on the week.

Oil was again the other big story. WTI finished Friday just over $100, up on the order of 9–10% for the week from last Friday’s $91.48. Brent was still up more than 8% on the week. Year-to-date the S&P 500 is up about 12.0–12.8%, the Dow roughly 10.6–11%, and the Nasdaq about 13.8–14.0%.

Overseas,

Global equities were softer, with Europe and Hong Kong under more pressure than a few corners of Asia. Asia-Pacific: Japan’s Nikkei fell about 1.55% on the week to 64,011.34. South Korea’s KOSPI was one of the better tapes, up about 3.3% for the week even after a weak Friday. Hong Kong’s Hang Seng dropped about 3.3% to 24,805.63. Mainland China was slightly lower, with the Shanghai Composite off about 1.1% to 3,888. In Europe: Germany’s DAX dropped about 1.8–2.0% to 25,569 and France’s CAC lost roughly 1.2% to 8,180. The STOXX Europe 600 finished down around 1.6–1.8%. The FTSE 100 gave back last week’s calm, falling 1.67% to 10,650.44. Foreign stocks remain the cheaper side of the ledger on a multi-year view — this week just was not their week either.

What’s the FED doing now?

The Federal Reserve’s target range for the federal funds rate remained unchanged at 3.50%–3.75% (effective rate still around 3.63%). FOMC meeting is this week; September 15–16, with a decision, SEP and dot plot on Wednesday, September 16. The earlier lean toward a hold if inflation cooled is now a harder sell after two firm price prints and $100 oil.

CME FedWatch odds of a 25-basis-point hike on September 16 moved from the high 50s / mid-60s at last week’s close into the mid-to-high 80s after Friday’s CPI — near 87–90% depending on the print. Markets are also pricing a decent chance of another hike by year-end. The 2-year yield finished at 4.63% (up from 4.37% last Friday) and the 10-year at 4.96% (up from 4.78%). Next week is the meeting itself. A hike is now the base case, not the risk case. What still matters is the dots and the press conference: one-and-done versus a path that keeps tightening into year-end.

In Economic news,

Last week’s headlines were the August inflation reports. PPI (Thursday): final demand +0.4% month-over-month after a revised +0.1% in July; +5.4% year-over-year. Energy +4.2% on the month. CPI (Friday): +0.4% month-over-month and +3.4% year-over-year, same annual rate as July but a faster monthly pace after July’s +0.1%. Core CPI +0.3% / +2.4% year-over-year — the softest core annual reading in 64 months, even as the monthly core print ran a tenth hot versus a 0.2% consensus in some surveys. Gasoline +3.9% month-over-month; energy overall +2.1%.

Last Thursday also brought August existing home sales (see housing below). Taken together: the labor market is not breaking, factories are still expanding from last week’s ISM, and inflation inputs remain sticky enough — especially through energy — that Warsh has cover if he wants to hike on Wednesday.

In the housing market and mortgage rates news.

August Existing-Home Sales were the official print this week: down 2.0% month-over-month to a seasonally adjusted annual rate of 3.98 million units, off 1.2% year-over-year and the first break below 4 million since June 2025. Median existing-home price was $429,100 (+1.6% YoY). Inventory rose 3.2% to about 1.62 million units (4.9 months’ supply), the most comfortable supply reading in years. Mortgage rates moved the wrong way for buyers again. Freddie Mac’s Primary Mortgage Market Survey for the week ending September 10 showed the average 30-year fixed rate at 6.76% (up 5 basis points from 6.71%) and the 15-year fixed at 6.09% (up 5 basis points from 6.04%). A year ago, the 30-year averaged about 6.35–6.50%. Daily lender quotes late in the week were even higher as the 10-year pushed toward 5%. MBA data earlier in the week already showed purchase demand sensitive to the backup. Overall, housing is still stable-to-soft: more listings help, prices are still rising modestly, but a 6.76% (and rising) 30-year keeps a stronger recovery on hold. Demand remains highly sensitive to even small rate moves — and last week’s rates went up again.

So, in summary,

Wall Street is nervous probably for the rest of 2026, President Trump is now admitting no easing in gas prices until after the election, he has figured out that the Iranian Regime will continue to be a headache hoping it affect the US midterm elections, however after the first ever midterm convention, the base seems electrified again and it is obvious that the Administration will pull out all stops to campaign in key races to insure Republicans hold both the House and the Senate. Apparently, the Democrats are held in lower regard than the Republicans and nominating numerous Socialist/Communist candidates is not helping their public perception. We are still looking for a good end of the year and a positive year overall as we enter the fall. Most major forecasts still look for the S&P 500 to continue higher into year-end on solid corporate earnings and an economy that is cooling but not breaking. Typical year-end targets still imply mid-single-digit upside from here if inflation does not re-accelerate from $100 oil. This is a high priority for the Trump administration to mitigate this political problem. The near-term risks are sharper: a September hike is now the market’s base case, WTI is back at $100 on the Iran fight, and the 10-year is flirting with 5%. We share the positive longer-term view, but this Wednesday’s FOMC the decision, and Chairman Warsh’s press conference — matters more than usual. As we said before, a genuine de-escalation, Iranian revolt, or military hits on the remaining military troublemakers will let oil flow freely through the Strait of Hormuz and world oil prices will fall. The probable rate hike, that is clearly framed as insurance, rather than the start of a new tightening leg. Until then we stay balanced and cautiously optimistic.

Mike