Week in Review: September 4, 2026

September 8, 2026

Recap & Commentary

Markets ended the week effectively unchanged. After coming off a relatively quiet August, markets will now turn their focus towards the Federal Reserve’s upcoming September meeting. Over the course of August, longer-term interest rates moved higher, driven in part by investor skepticism as to whether new Fed Chair Kevin Warsh would support raising rates to put downward pressure on inflation. Warsh’s comments at the Fed’s recent Jackson Hole meeting that underlying inflation trends have not “meaningfully improved” during the summer were seen “hawkish”, i.e. supportive of raising rates.

The August employment report provided further support for a Fed rate hike. Nonfarm payrolls additions were over three times the consensus forecast, while unemployment remained unchanged and tied with July at 4.1%, the lowest level since June 2025. Given the Fed’s dual mandate of price stability and maximum employment, the August employment report suggested a firming of labor conditions, removing an impediment to raising rates. Market expectations for a September rate hike rose from 50% to 60% following the employment report. Next up will be this week’s August inflation data. A lack of improvement, or further signs of upward pressure would, might well be enough to convince the Fed to raise rates by 0.25%.

Diesel prices garnered attention during the week, hitting an all-time high of $5.90/gallon according to AAA, due to the convergence of multiple factors: 1) The closure of the Strait of Hormuz has constrained the supply of oil from which diesel is refined. 2) The closure has also restricted diesel exports from the Middle East. 3) Following the outbreak of Middle East fighting, jet fuel prices spiked. In response refiners switched to making more jet fuel at the expense of making diesel. 4) Ukrainian strikes on Russian refineries have led Russia to halt many energy exports, including diesel. Upward pressure on diesel prices will likely continue into the fall as the harvest season commences. According to the Engine Technology Forum, 75% of US agricultural equipment runs on diesel. Winter will put further pressure on prices as the demand for heating oil, almost chemically identical to diesel, increases.

Economic Commentary

Nonfarm payrolls added 162K jobs in August, far more than the 53K consensus figure. Underlying details were also strong with the household survey showing 569K individuals found work while 683K entered the labor force, helping the participation rate rebound to 61.6%, after falling to a nearly five-and-a-half year low of 61.4% in July. The prior two months were revised up by a combined 55K helping July swing from a net loss of -23K to a net gain of 21K.

Data from the Institute for Supply Management (ISM) pointed to mixed economic conditions as manufacturing slowed slightly in August, while service sector activity rose to a six-month high. Employment in both sectors deteriorated, with services shedding jobs for fifth time in six months. New orders in both sector continued to expand with services seeing the strongest demand since February 2023. Ongoing pressures from Middle East fighting, rising health care costs, new tariffs, and computer ship shortages were cited as reason for services sector input prices accelerating at their fastest pace since July 2022.

On Note

Historically, September is the worst calendar month of the year for the S&P 500. Since 1950, the average September return for the S&P 500 has been -0.6%, ranging from 8.7% (2010) to -11.9% (1974).​

Market Indices (As of 09/04/2026)

• Consumer Inflation (CPI)

• Production Inflation (PPI)

• Consumer Sentiment

• Existing Home Sales

• Initial Jobless Claims