The Markets (as of market close September 18, 2026)
Wall Street ended a volatile week with mixed results as stock traders reacted to the Federal Reserve’s first interest-rate increase in three years, rising Treasury yields, and continued uncertainty surrounding global energy supplies. The NASDAQ gained approximately 0.7% for the week, supported by strength in semiconductor stocks. The S&P 500 slipped approximately 0.1%, while the Dow declined 1.7%, its largest weekly percentage decrease since March.
The Federal Reserve raised the federal funds target range by 0.25 percentage point to 3.75%-4.00%. Policymakers cited persistent inflation alongside solid economic activity, resilient consumer spending, strong productivity growth, and limited changes in unemployment. Most Federal Reserve officials also projected at least one additional rate increase before the end of the year.
Bond yields moved higher following the decision, with the yield on the 10-year Treasury briefly exceeding 5% for the first time since 2007. Crude oil prices eased late in the week but remained above $100 per barrel as disruptions involving the Strait of Hormuz and Saudi Arabian energy infrastructure continued to raise concerns about global supplies and broader inflationary pressures. Brent crude settled Friday at approximately $104 per barrel.
Last Week’s Economic News
- The Federal Reserve raised interest rates for the first time in three years. The Federal Open Market Committee unanimously increased its benchmark rate by 0.25 percentage point to a target range of 3.75%-4.00%. Policymakers indicated that inflation remains elevated and that the increase would support a more timely return to the Fed’s 2% target.
- Consumer spending remained resilient. Retail sales increased 1.2% in August. The stronger-than-expected increase suggested consumers continued spending despite elevated borrowing costs and rising prices for energy and other necessities.
- The labor market remained on solid footing. Initial unemployment claims fell to 196,000 for the week ended September 12, their lowest level since mid-July. The four-week moving average also declined, indicating that layoffs remain relatively limited despite a more moderate pace of hiring.
- Housing data reflected the effects of rising borrowing costs. Single-family housing starts increased 7.6% in August, but permits for future single-family construction fell 1.8%. Mortgage rates approached 7%, adding pressure to affordability, builder confidence, and residential investment.
- Energy prices remained a significant inflation risk. Although crude oil prices declined modestly for the week, Brent crude remained above $100 per barrel. Record diesel prices and disruptions to regional shipping and energy infrastructure raised concerns about higher transportation, manufacturing, and agricultural costs.
Eye on the Week Ahead
Following the Federal Reserve’s interest-rate increase, stock market watchers will focus on comments from policymakers for additional guidance on the timing of another potential rate hike. Markets ended last week pricing in a meaningful possibility that the Fed could raise rates again at its October meeting.
Several reports will offer fresh insight into the economy, including September manufacturing and services activity, August durable goods orders, new-home sales, and weekly unemployment claims. Investors will be watching for signs that higher interest rates and energy costs are beginning to slow business investment, housing activity, or consumer demand.
Geopolitical developments are also likely to remain important market catalysts. President Donald Trump and Chinese President Xi Jinping are expected to meet this week, with trade, tariffs, technology, and international security among the anticipated topics. Meanwhile, developments in the Middle East and fluctuations in crude oil prices will continue to influence inflation expectations, Treasury yields, and overall market sentiment.
Have a nice week!
Sincerely,
Robert G. Carpenter