The Markets (as of market close September 11, 2026)
Wall Street experienced a volatile week as stock traders weighed persistent inflation, sharply higher oil prices, rising Treasury yields, and escalating tensions in the Middle East. Stocks rallied on Friday, with the Dow, S&P 500, and NASDAQ each gaining close to 1%, but the rebound was not enough to erase earlier losses. The S&P 500 declined approximately 0.8% for the week, while the NASDAQ fell about 0.7%.
Inflation and interest rates remained major drivers of short-term market trading activity. The 10-year Treasury yield approached 5% during the week, reaching its highest level in nearly three years, as stock market watchers increasingly anticipated that the Federal Reserve could raise interest rates at its September meeting. Yields eased somewhat on Friday after the August Consumer Price Index came in near expectations, but borrowing costs remained elevated.
Energy markets added another layer of uncertainty. Crude oil prices surged more than 8% for the week amid escalating tensions involving Iran, attacks on vessels and energy infrastructure, and continued disruptions to shipping through the Strait of Hormuz. West Texas Intermediate crude finished Friday at approximately $100 per barrel, while Brent crude settled above $104.
Last Week’s Economic News
- Consumer inflation accelerated in August. The Consumer Price Index increased after rising just very slightly in July. Over the past 12 months, consumer prices increased. Gasoline prices jumped during August and accounted for more than one-third of the monthly increase. Core prices, excluding food and energy, increased for the month and 2.4% from a year earlier.
- Producer prices also moved higher. The Producer Price Index increased in August after rising very little in July. Producer prices were 5.4% higher than a year earlier. Goods prices increased during the month, while services prices rose slightly. The index excluding food, energy, and trade services increased minimally.
- The combination of higher consumer and producer prices strengthened expectations for additional Federal Reserve tightening. By the end of the week, traders had significantly increased their expectations for a quarter-percentage-point rate increase at the Fed’s September meeting.
- The labor market remained relatively stable. Initial unemployment claims declined somewhat for the week ended September 5. Continuing claims also edged lower. Claims have remained within a relatively narrow range since mid-July, suggesting layoffs remain limited despite signs of slower hiring earlier this summer.
- Energy prices remained a significant inflation risk. Supply disruptions and escalating conflict in the Middle East pushed crude oil above $100 per barrel during the week. Shipping through the Strait of Hormuz remained constrained, while attacks on other regional energy infrastructure added to concerns about global supply.
Eye on the Week Ahead
The Federal Reserve takes center stage this week, with policymakers scheduled to announce their latest interest-rate decision on Wednesday. Following stronger labor data, persistent inflation, and the recent surge in energy prices, expectations have shifted considerably toward another rate increase. A Reuters survey conducted ahead of the meeting found that 85% of economists expected the Fed to raise its benchmark rate by 0.25 percentage point, bringing the target range to 3.75%-4.00%.
Stock market watchers will be paying close attention not only to the rate decision but also to Federal Reserve Chair Kevin Warsh’s comments for indications of whether additional tightening could follow. August import and export price data will also provide another look at inflationary pressures. Meanwhile, developments in the Middle East and crude oil prices are likely to remain important market catalysts as disruptions to global energy supplies continue.
Have a nice week!
Sincerely,
Robert G. Carpenter