The Markets (as of market close August 28, 2026)
Major U.S. stocks ended the final full week of August modestly higher as strong earnings from artificial intelligence companies helped support technology shares. However, continued tensions with Iran, persistent inflation, and a more cautious Federal Reserve tempered enthusiasm among stock traders. The Dow, NASDAQ, and S&P 500 posted weekly gains, while the Russell 2000 and Global Dow finished lower.
Federal Reserve Chair Kevin Warsh reinforced the Fed’s cautious approach during remarks at the Jackson Hole Summit. While acknowledging that recent inflation readings have been better than expected, Warsh indicated that the improvement has not been sufficient to warrant a shift toward easier monetary policy. Communication services, financials, information technology, consumer discretionary, and materials were among the strongest market sectors. Meanwhile, crude oil prices declined as improving transportation through the Strait of Hormuz helped ease concerns about global supply disruptions.
Last Week’s Economic News
- The U.S. economy expanded at an annualized rate of 1.5% in the second quarter, according to the Bureau of Economic Analysis’ second estimate, following 2.1% growth in the first quarter. Consumer spending increased, exports rose, and investment advanced, while government spending declined.
- The Federal Reserve’s preferred inflation measure remained elevated. The Personal Consumption Expenditures (PCE) Price Index rose 0.2% in July and 3.7% over the past 12 months. Core PCE, which excludes food and energy, also increased slightly for the month and 3.3% from a year earlier. Personal income rose, disposable income increased, and consumer spending advanced.
- The U.S. goods trade deficit widened significantly in July, increasing 17.2% to $118.8 billion. Goods exports declined 2.9% to $199.4 billion, while imports increased 3.7% to $318.2 billion.
- New home sales declined sharply in July, falling 10.5% from June and 6.3% from a year earlier. Available inventory increased to a 9.6-month supply, while the median sales price declined to $393,800, down 2.3% from June and 0.9% from July 2025.
- Durable goods orders increased 1.1% in July, marking the fourth increase in five months. Transportation equipment led the advance, while orders excluding transportation increased 0.4%. Overall, durable goods orders were 7.6% higher than a year earlier.
- Initial unemployment claims declined to 203,000 for the week ended August 22. Continuing claims fell to 1.778 million, while the insured unemployment rate remained unchanged at 1.2%.
- The national average price for regular gasoline increased, as of August 24, up a bit from the previous week.
Eye on the Week Ahead
The August employment report will take center stage this week following July’s estimated decline of 23,000 payrolls. Stock market watchers will be paying close attention to job creation, unemployment, wage growth, and labor force participation for additional evidence of whether the labor market is weakening. With inflation still running above the Federal Reserve’s target, the employment report could also help shape expectations for the Fed’s next monetary policy decision.
Have a nice week!
Sincerely,
Robert G. Carpenter