August 31, 2026

“The four most dangerous words in investing are: ‘this time it’s different.”

Sir John Templeton

US equities finished higher for the week, snapping last week’s slide, as blockbuster results from Nvidia, Salesforce and CrowdStrike lifted the Nasdaq and the S&P 500 before a hawkish Jackson Hole speech from Chairman Warsh trimmed Friday’s close.

Here are the numbers, the S&P500 finished up .49%, the Dow Jones Industrial Average gained .53%, the Nasdaq gained .85% Internationally, the FTSE 100 managed a gain of .07% and the MSCI-EAFE was off .57%. the 2-Year treasury paid 4.34% and the 10-Year yield was 4.73%

So, what happened?

A powerful mid-week earnings burst from the AI complex did the heavy lifting. After the bell Wednesday, Nvidia jumped nearly 9% on stronger-than-expected results and guidance calling for roughly 70% revenue growth next fiscal year; Salesforce climbed more than 22% on a robust outlook and a $2.6 billion mark-to-market gain on its Anthropic stake; and CrowdStrike surged over 20% on record demand for agentic AI security. Last Thursdays opened with a Boom as the Nasdaq jumped about 1.6% and the S&P 500 added 0.7% as technology and communication services led. That rally more than offset a quiet, slightly softer start to the week and last Fridays fade after Chairman Kevin Warsh’s first Jackson Hole speech as Fed chair. The S&P 500 closed last Friday at 7,711.76, up about 37 points for the week and still roughly 1.1% below its August 13 record close of 7,798.99. The Dow Jones Industrial Average finished at 53,559.99 (up about 283 points) and the Nasdaq Composite closed at 26,402.42. Small caps did not join the party as the Russell 2000 dropped about 1.5% to 2,972.37. Oil prices helped risk appetite: WTI settled around $83.40, down more than 4% on the week, as traders priced in a choppy recovery of Strait of Hormuz flows even as the Iranian conflict remains unresolved. Energy was mixed on the lower crude print; information technology and communication services were the clear weekly winners. Year-to-date the S&P 500 is up about 12.7%, the Dow roughly 11.4%, and the Nasdaq about 13.6%.

Overseas, a bit more detail this week as they impacted our good foreign performance.

Global equities were mixed, with Europe slightly firmer and Asia split between AI-linked winners and China/Hong Kong softness. Asia-Pacific: Japan’s Nikkei rose about 0.6% to 66,405.56, helped by the Nvidia handoff and bank shares as hotter Japanese inflation kept Bank of Japan tightening talk alive. Taiwan’s TAIEX jumped roughly 2.5% on semiconductor strength. South Korea’s KOSPI slipped about 1.8%, and Hong Kong’s Hang Seng fell about 1.6% as large internet and consumer names lagged. Mainland China was mixed — the Shanghai Composite gained around 1.2% while the CSI 300 was little changed to slightly lower. In Europe: Germany’s DAX was a standout, up about 1.7%, while the STOXX Europe 600 finished roughly flat to up 0.2%. France’s CAC lagged (off around 0.8–1.0%) on renewed political noise ahead of next spring’s election. The FTSE 100 essentially went nowhere, up 0.07% to 10,824.26. Which is why we still like foreign stocks on a multi-year view, even if this particular week was choppy.

What’s up with the FED?

The Federal Reserve’s target range for the federal funds rate remained unchanged at 3.50%–3.75% (effective rate still around 3.63%). There was no FOMC meeting this week; the next is September 15–16, with a decision, SEP and dot plot due Wednesday, September 16. The event of the week was Chairman Warsh’s Jackson Hole keynote last Friday. He said inflation is still running above the 2% target, recent readings “do not tell me that underlying trends have meaningfully improved,” and laid down a clear standard: the Fed must be confident that underlying inflation is moving to objective “clearly and at sufficient speed. Otherwise, we have work to do.” Markets heard hawkish. The 2-year yield jumped more than 10 basis points on Friday to about 4.34%, and CME FedWatch odds of a 25-basis-point hike at the September meeting rose from the mid-30s percent Thursday into the mid-50s to around 60% by Friday afternoon. Traders also lifted the chance of at least one hike by year-end. July PCE, released Wednesday, did not give the doves much cover: headline and core both rose 0.2% month-over-month, with headline 3.7% year-over-year and core 3.3%. What could change? Good news on oil flow with the weekend announced Venezuelan oil deal and the Administration claims that ships are increasingly moving through the Strait of Hormuz, it all should start showing up at the pump in the next few weeks.

In Economic news,

The data calendar was busy and a bit hotter than last week’s cooler CPI/PPI mix. July Personal Consumption Expenditures (Wednesday, August 26): the Fed’s preferred inflation gauge rose 0.2% month-over-month on both headline and core. Year-over-year, headline PCE was 3.7% and core 3.3% — still well above the 2% target and little changed from June. Personal income rose 0.4% and real spending was essentially flat. The second reading of Q2 GDP confirmed +1.5% annualized growth, matching the advance estimate and cooler than Q1’s 2.1%. New Home Sales (Tuesday): July sales fell 10.5% to a seasonally adjusted annual rate of 607,000 units, missing consensus near 615,000 and reversing June’s rebound. Conference Board Consumer Confidence slipped to 89.2–89.4 in August from 90.2 in July, a modest miss. Jobless claims eased to 203,000, keeping the labor market in the “not breaking” camp. Taken together, activity is resilient, housing is the soft spot, and inflation is not yet giving the Fed the all-clear Warsh said he needs.

In the housing market and mortgage rates news. Why? This is a major “affordability factor”

July Existing-Home Sales (reported earlier this month) remain the last official existing-sales print: down 1.7% month-over-month 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) with inventory around 1.54 million units (4.6 months’ supply). The newer data this week was weaker. July new home sales dropped 10.5% to 607,000, underscoring how rate-sensitive the for-sale market still is. Mortgage rates ticked up after two weekly declines. Freddie Mac’s Primary Mortgage Market Survey for the week ending August 27 showed the average 30-year fixed rate at 6.66% (up 1 basis point from 6.65%) and the 15-year fixed at 5.98% (up 3 basis points from 5.95%). A year ago, the 30-year averaged 6.56%. MBA data for the week ending August 21 showed total applications down 1.0% seasonally adjusted, with purchase applications off 0.3% and refinances down 2%. No surprise that purchase activity is now about 5% behind last year’s pace. Overall, housing is stable-to-soft: existing sales are holding near year-ago levels and prices are still rising modestly, but 6.6% mortgage rates, limited inventory, and a sharp drop in new-home sales keep a stronger recovery on hold. Demand still responds quickly when rates ease even a little — and this week they did not.

So, in summary,

Wall Street’s consensus for the remainder of 2026 still leans moderately good on US equities. Most major forecasts look for the S&P 500 to grind higher into year-end on solid corporate earnings — particularly AI infrastructure spend, which Nvidia just reaffirmed in no uncertain terms — and an economy that is cooling but not breaking. Typical year-end targets still imply mid-single-digit upside from here, assuming inflation does not re-accelerate. That said, the near-term risks are clearer after Jackson Hole: Warsh put a September hike back on the table, long-term yields remain elevated, and the Iranian conflict is six months old with Hormuz flows is mostly restored. We share the constructive longer-term view, but the next two weeks matter — the September 4 jobs report and the September 16 FOMC (complete with a new dot plot) will set the tone. What has changed and is making us a bit more bullish? A genuine de-escalation that lets oil flow freely through the Strait of Hormuz and pulls energy prices lower, plus a cooler inflation print that lets the hike odds fade. Until then we stay balanced and selective.

Mike