September 21, 2026

2026-09-21
By admin83
Posted in Uncategorized

“The investor’s chief problem — and even his worst enemy — is likely to be himself.”
Benjamin Graham

US equities finished mixed for the week, with the Nasdaq managing a modest gain while the Dow posted its third straight weekly decline after the Federal Reserve delivered its first rate hike since 2023 and the 10-year Treasury yield touched 5%.
Here are the numbers, the S&P500 finished down .08%, the Dow Jones Industrial Average lost 1.69%, the Nasdaq gained .72% Internationally, the FTSE 100 managed a gain of .08% and the MSCI-EAFE was off about .60%. The 2-Year treasury paid 4.76% and the 10-Year yield was 5.00%

So, what happened?

The week split in two around Wednesday’s FOMC decision. Ahead of the meeting, stocks drifted lower as oil held above $100 and investors priced in a hike that was no longer a surprise. On Wednesday the Fed raised the funds rate 25 basis points to 3.75%–4.00% — unanimous, first increase in three years and the statement plus the new dots made clear another hike this year is on the table. Stocks sold the decision, then bounced Thursday as semiconductors led (Nasdaq +1.7%, S&P 500 +1.1%, Dow +0.6%). Friday was a shrug: the 10-year yield climbed back to 5.00%, oil swung, and most stocks finished lower even as the Nasdaq and S&P eked out small gains. The S&P 500 closed Friday at 7,650.50, down about 6 points on the week and roughly 1.9% below its August 13 record of 7,798.99. The Dow Jones Industrial Average finished at 51,682.64, down about 891 points for its biggest weekly percentage drop since March and a third consecutive losing week. The Nasdaq Composite closed at 26,522.55. Small-caps had a tougher time, the Russell 2000 fell about 1.5% to 2,860.40. Energy was volatile with crude: WTI traded as high as $106.75 mid-week before settling last Friday at $100.30, little changed from the prior Friday after a wild ride. Information technology was the winner weekly; utilities and materials lagged. Year-to-date the S&P 500 is up about 11.8%, the Dow roughly 7.5%, and the Nasdaq about 14.1%.

International market news,

Global equities were mixed, with Asia firmer and Europe softer as several central banks tightened alongside the Fed. Asia-Pacific: Japan’s Nikkei rose about 1.6% to 65,018.95 even after the Bank of Japan lifted its policy rate from 1.00% to 1.25%, a 31-year high. Taiwan’s TAIEX jumped about 2.2% on semiconductor strength. South Korea’s KOSPI was little changed on the week after a strong Friday. Hong Kong’s Hang Seng finished around 24,751, modestly higher on the week after a late bounce. The Shanghai Composite gained about 0.6%. In Europe: Germany’s DAX dropped about 1.1% to 25,304 and France’s CAC lost about 1.4% to 8,065. The STOXX Europe 600 finished down around 0.6%. The FTSE 100 was the calm one again, up 0.08% to 10,659.13. We still like foreign stocks on a multi-year view this week Europe just paid more of the rate-hike bill.

What did the FED do?

This was the meeting. The FOMC voted 12–0 on Wednesday to raise the federal funds target range by 25 basis points to 3.75%–4.00%, the first hike since 2023. Chairman Warsh said inflation is “too high and has been for too long,” that summer readings “do not tell me that underlying trends have meaningfully improved,” and that the Committee’s Jackson Hole standard — confidence that inflation is moving to 2% “clearly and at sufficient speed” has not been met. He added he would be “hard pressed to describe broad financial conditions as restrictive.” The new SEP shows median GDP of 2.3% this year and 2.4% next, unemployment near 4.1%, and headline PCE inflation at 3.7% this year falling to 2.3% next year. On the dots: 12 of 18 officials see one more hike this year, four see two more, and only two see rates on hold from here. Markets now price a bit more than a coin-flip chance of another 25 basis points at the October 27–28 meeting (odds moved into the mid-50s from the low 40s a week ago). Next scheduled meeting after that is December 8–9.

In Economic news,

The data that sealed the hike landed just before this week: August CPI (released September 11) rose 0.4% month-over-month and 3.4% year-over-year. Core CPI rose 0.3% month-over-month and 2.4% year-over-year. Gasoline jumped 3.9% and did a lot of the headline work; core was still a tenth firmer than consensus. This week’s own print was stronger spending. August Retail Sales (Wednesday, September 16): headline rose 1.2% month-over-month to $773.9 billion (versus about +0.8% expected), after July was revised to −0.5%. Core and control-group sales both rose 1.4%. Gasoline stations (+3.1%) and nonstore retailers (+2.6%) led; building materials slipped. Year-over-year sales were up 6.0%. That is a consumer that is still spending, even with 6.9% mortgages and $100 oil. Combined with last week’s +162,000 payrolls, it gave Warsh the “economy is strengthening” line he used at the press conference. Inflation is not back to 2%, activity is not breaking, and that is the mix the Committee just chose to tighten into.

In the housing market and mortgage rates news UGH!.

August Existing-Home Sales (reported September 10) fell 2.0% month-over-month to a seasonally adjusted annual rate of 3.98 million units, down 1.2% year-over-year and the first print below 4.0 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). Mortgage rates jumped with the 10-year. Freddie Mac’s Primary Mortgage Market Survey for the week ending September 17 showed the average 30-year fixed rate at 6.95% (up 19 basis points from 6.76%, the highest since January 2025) and the 15-year fixed at 6.26% (up 17 basis points from 6.09%). A year ago, the 30-year was well below that. Overall, housing is softening at the margin: sales slipped below 4 million, inventory is slowly building, and a near 7% 30-year is a real affordability hit. Demand still responds when rates ease, they did the opposite this week.

So, in summary,

Wall Street’s longer-term consensus on US equities is still positive, but the near-term bar just got higher. Earnings, especially AI infrastructure spending, remain the bull case, and the economy is cooling 9however the Atlanta FED is leaking a 5% GDP number this quarter, which could signal more strength than the media would like to have you believe. Hummmm, I wonder why) rather than cracking. Typical year-end targets still imply some upside from here if inflation rolls over. This week the President will meet with Gulf State leaders at the UN, the result can be some definitive action on what to do about Iran, the risks will be clearer after this week: the Fed has hiked, the dots point to at least one more move, the 10-year is at 5%, WTI is still around $100, and the Iranian conflict continues to keep a war premium in energy. We share the constructive longer-term view, but we are not going to pretend Wednesday was a nothing-burger. Let’s see if the Gulf states dovish tone has changed since Iran seems to be dropping bombs on them. Will they encourage the President to finish the job or still seek a resolution without further massive air strikes? In any case the political considerations will become more influential as we move toward the midterms.

Mike

September 21, 2026

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