TCM BLOG

Stocks fell over a shortened trading week as higher oil prices and rising Treasury yields weighed on investor sentiment, with the S&P 500 down 0.80%, the Nasdaq off 0.66%, and the Dow sliding 1.57%. Markets stayed under pressure through midweek as the 10-year Treasury yield hit a 3-year high following news of an expanded government debt buyback program. Friday brought relief, however, as a steady August CPI reading of 3.4% year-over-year and falling oil prices helped stocks rebound to close out the week on a positive note. With inflation holding firm, investor attention has shifted from whether the Fed will cut rates this year to how many cuts may be needed.

Markets were mixed last week as the S&P 500 and Nasdaq eked out small gains while the Dow slipped, with rising Treasury yields and Middle East tensions weighing on sentiment early on. Stocks rebounded midweek after Fed Governor Christopher Waller signaled the Fed may hold rates steady at its next meeting. Friday's jobs report threw a curveball, though — August payrolls came in far stronger than expected (162,000 vs. the 53,000 forecast), reigniting debate over the Fed's next move. Unemployment held steady at 4.1%, and investors now turn to this week's CPI and PPI data for more clues on the rate path ahead.

August was a strong month for markets, with renewed AI enthusiasm driving the S&P 500 up 2.62% and the Nasdaq up 3.93%, while the Dow lagged behind at 1.34%. Energy and Information Technology led U.S. sector gains, while Utilities and Industrials came under pressure. On the economic front, inflation came in as expected but job growth missed forecasts, with employers shedding 23,000 jobs in July. That mixed picture gives the Fed plenty to weigh at its September 15-16 meeting. Looking ahead, all eyes will be on consumer spending trends as retail sales data continues to offer clues about the health of the economy.

Stocks rebounded last week, but the real story came out of Wyoming, where Fed Chair Kevin Warsh used his Jackson Hole keynote to signal that inflation remains a top concern and that the Fed may not be finished tightening. Several regional Fed presidents, including Cleveland's Beth Hammack, Dallas's Lorie Logan, and Minneapolis's Neel Kashkari, echoed that hawkish tone in their own remarks. Markets initially shrugged off the comments on Friday, but sellers took over as the session wore on, pushing short and intermediate-term Treasury yields higher. With the Fed signaling it wants to say less about future moves rather than more, investors may be left parsing every word for clues on where rates go next.