The Markets (as of market close September 4, 2026)
Most major market indexes finished the week moderately higher despite a late-week pullback. Strong corporate earnings and signs of economic resilience supported stocks, while an unexpectedly strong August jobs report raised concerns that the Federal Reserve could increase interest rates later this month. The NASDAQ, S&P 500, Russell 2000, and Global Dow posted weekly gains, while the Dow finished slightly lower.
Market sector performance was mixed, with energy and communication services among the strongest performers, while industrials, materials, and real estate lagged. Treasury yields moved higher following Friday’s employment report as stock traders assessed the implications of continued labor market strength for Federal Reserve policy. Crude oil prices climbed nearly 9.5% for the week as continued tensions between the United States and Iran contributed to uncertainty surrounding global energy supplies.
Last Week’s Economic News
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Job growth exceeded expectations in August, with payrolls increasing by 162,000. Combined with upward revisions to June and July, employment increased by 214,000 from June through August, well above the average monthly gain of 31,000 over the prior 12 months. The unemployment rate remained unchanged at 4.1%.
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Labor force participation improved in August. The labor force participation rate increased 0.2 percentage point to 61.6%, while the employment-population ratio rose to 59.1%. Average hourly earnings increased 0.3% to $37.75 and were 3.1% higher than a year earlier. The average workweek edged up to 34.4 hours.
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Job openings remained relatively stable at 7.3 million in July, while hiring declined by 278,000 to 5.1 million. Total separations also decreased during the month. June job openings were revised lower to 7.2 million.
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Manufacturing activity improved at a solid pace in August, according to the S&P Global U.S. Manufacturing PMI. Inventory building helped support growth, although production and new orders softened amid concerns about additional price increases and material shortages.
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Services activity accelerated in August, supported by the strongest increase in new business since December 2024. Service providers increased hiring in response to stronger demand. Inflation pressures eased from July’s recent high but remained elevated by historical standards.
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The U.S. trade deficit widened to $88.6 billion in July, an increase from June. Exports declined 2.1%, while imports rose 2.8%. Through July, the trade deficit remained 29.6% below its level during the same period in 2025.
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Initial unemployment claims increased slightly to 206,000 for the week ended August 29. Continuing claims stood at 1.779 million, while the insured unemployment rate remained unchanged at 1.2%.
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The national average price for regular gasoline declined slightly as of August 31, down from the prior week but higher than a year earlier.
Eye on the Week Ahead
Inflation takes center stage this week with the release of the August Consumer Price Index (CPI) and Producer Price Index (PPI). In July, consumer prices increased 0.1% after falling 0.4% in June, while producer prices were unchanged. Following the stronger-than-expected August employment report, stock market watchers will be paying particularly close attention to the inflation data for clues about the Federal Reserve’s next interest-rate decision.
Have a nice week!
Sincerely,
Robert G. Carpenter