Weekly Wrap

The major averages finished lower in the holiday-shortened week as surging oil prices and a sharp rise in Treasury yields created persistent headwinds for equities. The S&P 500 declined 0.8%, the Nasdaq Composite fell 0.7%, and the DJIA lost 1.6%. Small- and mid-cap stocks faced even greater pressure, with the Russell 2000 down 2.4% and the S&P Mid Cap 400 falling 1.9%.

Oil was the dominant influence for much of the week. WTI crude surged roughly 10% to finish above $100 per barrel as escalating hostilities between the U.S. and Iran heightened concerns about regional energy supplies and the Strait of Hormuz. The advance helped the energy sector gain 2.0%, making it one of just two sectors to finish higher, but presented a significant headwind for much of the rest of the market. A modest retreat in crude on Friday helped stocks recover some of their earlier losses.

Rising Treasury yields added to the pressure as inflation data strengthened expectations for another rate hike at next week's FOMC meeting. Thursday's PPI report reinforced those expectations, while Friday's CPI report pushed the market-implied probability of a 25-basis-point hike above 85%. The 10-year note yield climbed 20 basis points for the week to 4.98%, with the increase weighing particularly heavily on smaller stocks and rate-sensitive areas.

Technology stocks provided some relative support despite a mixed showing beneath the surface. The information technology sector slipped just 0.2%, while the PHLX Semiconductor Index gained 0.8% as chip stocks generally held up better than the broader market. Software remained a pronounced weak spot, however, with the iShares Expanded Tech-Software ETF falling 2.9%. Friday's rebound in semiconductor and AI infrastructure names helped the technology sector recover some of its earlier losses.

Weakness was considerably broader outside the energy and technology complexes. The health care sector fell 3.6%, while materials (-1.7%), financials (-1.5%), consumer discretionary (-1.2%), industrials (-1.1%), and real estate (-1.1%) sectors also posted sizable declines. The communication services sector bucked the broader weakness with a 1.1% gain, helped by strength in select mega-cap names.

Overall, the week's losses reflected a challenging combination of geopolitical escalation, sharply higher oil prices, rising Treasury yields, and growing expectations for tighter monetary policy. Friday's broad rebound provided some relief as crude oil retreated and technology leadership reemerged, but it was not enough to erase the losses accumulated earlier in the week. Attention now turns to next week's FOMC meeting, with the market increasingly positioned for another rate hike following the latest inflation data.

• Nasdaq Composite: -0.7% week-to-date
• S&P 500: -0.8% week-to-date
• DJIA: -1.6% weekto-date
• S&P Mid Cap 400: -1.9% week-to-date
• Rusell 2000: -2.4% week-to-date

Monday: 

Market closed for Labor Day. 

Tuesday: 

The major averages finished lower on Tuesday as rising oil prices and renewed geopolitical tensions created a difficult backdrop for equities to begin the holiday-shortened week. The S&P 500 (-0.6%), Nasdaq Composite (-0.3%), and DJIA (-1.2%) all ended in negative territory, with pronounced health care weakness contributing to the blue-chip average's underperformance. The Russell 2000 (-0.5%) and S&P Mid Cap 400 (-0.7%) finished mostly in line with the broader market.

Crude oil remained a central influence throughout the session, settling $1.52 higher (+1.7%) at $93.02 per barrel following another pickup in Middle East hostilities over the weekend, including an exchange of strikes between the U.S. and Iran and a Houthi attack on a Saudi energy facility. The increase added to the difficult backdrop for equities, although the energy sector (+1.0%) benefited from the move and joined the utilities sector (+0.9%) as the only two S&P 500 sectors to finish higher.

Geopolitical concerns remained elevated into the afternoon. Reports indicated that the U.S. struck Iranian oil tankers as explosions were reported near Kharg Island, Iran's primary oil export hub, while Iran reportedly launched another attack against U.S. Navy ships. Crude oil continued to climb following the settlement as the headlines reinforced concerns surrounding further escalation and potential disruptions to regional energy supplies.

Elsewhere, the health care sector (-2.6%) finished at the bottom of the sector standings. Amgen (AMGN 393.17, -44.06, -10.08%) was among the day's weakest S&P 500 components after clinical trial setbacks at Novartis AG (NVS 137.70, -22.29, -13.93%) weighed on related names, while biotechnology stocks also faced considerable pressure. Amgen's sharp decline had an outsized impact on the DJIA and contributed significantly to its underperformance.

The financials sector (-1.4%) was another notable laggard amid broadly lower trading across the group.

Some oil- and rate-sensitive areas of the market also faced pronounced selling pressure, with the iShares U.S. Home Construction ETF falling 3.1%.

Meanwhile, the information technology sector (-0.2%) held up considerably better than the broader market thanks to continued strength across semiconductor stocks. The PHLX Semiconductor Index gained 1.3%, helping offset a 1.8% decline in the iShares GS Software ETF as well as weakness in NVIDIA (NVDA 225.73, -4.63, -2.01%) and other mega-cap stocks. Several company-specific catalysts contributed to the semiconductor outperformance. Intel (INTC 104.47, +8.67, +9.05%) rallied following positive analyst commentary and reports of potential price increases, while Advanced Micro Devices (AMD 505.74, +28.17, +5.90%) advanced after upbeat commentary regarding accelerating AI demand and its server CPU opportunity. Qualcomm (QCOM 174.09, +5.35, +3.17%) also gained after highlighting a multi-year agreement with Amazon (AMZN 256.97, -1.54, -0.60%) covering custom silicon and optical connectivity solutions, which management described as significant validation for its expanding data center business.

Optical stocks were another notable pocket of strength after Verizon (VZ 50.41, +0.27, +0.54%) and Corning (GLW 165.99, +11.69, +7.58%) announced a multi-billion dollar agreement covering more than 80 million miles of high-density optical fiber and connectivity solutions from 2027 through 2032. The agreement provided a positive read-through for the broader optical infrastructure market, helping propel sizable gains in Lumentum (LITE 978.54, +97.28, +11.04%) and Coherent (COHR 301.88, +20.02, +7.10%).

Tuesday's decline ultimately reflected broad weakness beneath the surface, with only two S&P 500 sectors finishing higher. Rising oil prices and renewed geopolitical tensions remained important headwinds, while sharp losses in health care and financial stocks added to the pressure. Semiconductor strength provided a meaningful counterweight and helped limit the Nasdaq Composite's decline, but investors generally remained cautious ahead of the August Producer Price Index on Thursday and Consumer Price Index on Friday, both of which could influence rate expectations ahead of next week's FOMC meeting.

U.S. Treasuries began the week with modest losses after failing to bounce from their lower start. The U.S. Treasury kicked off this week's note auction slate with a solid $58 billion 3-year note offering, which will be followed by a 10-year note sale tomorrow. The 2-year note yield settled up two basis points to 4.40%, and the 10-year note yield settled up two basis points to 4.81%. 

Reviewing today's data:

• Total consumer credit increased by $18.1 bln in July  (Briefing.com consensus $11.3 bln) while the June increase was revised down to $14.5 bln from $14.2 bln.
• The NFIB Small Business Optimism Index fell to 98.7 in August (Briefing.com consensus 99.3) from 99.8 in July.

Wednesday:

The major averages extended their holiday-shortened week decline on Wednesday as rising oil prices and higher Treasury yields kept equities under pressure throughout the session. The S&P 500 (-0.5%), Nasdaq Composite (-0.6%), and DJIA (-0.8%) all finished lower, while the Russell 2000 (-1.3%) and S&P Mid Cap 400 (-1.1%) underperformed amid even steeper losses outside the large-cap averages.

Crude oil remained one of the session's primary headwinds as the U.S.-Iran conflict continued to escalate. WTI crude settled $3.05 higher (+3.3%) at $96.07 per barrel after reports that the U.S. struck several Iranian oil tankers in response to an attack on one of its warships. Iran subsequently warned that it would escalate its counterstrikes as U.S. attacks continue, according to Bloomberg. The advance in crude provided a considerable boost to the energy sector (+1.1%), which stood alone in positive territory among the 11 S&P 500 sectors.

Higher Treasury yields added another layer of pressure after the Treasury Department announced plans to buy back $6 billion of long-term debt. The announcement sparked a sharp increase in rates during the late morning and helped push stocks to their session lows. The 10-year note yield ultimately settled three basis points higher at 4.84%.

The combination of higher oil prices and rising rates weighed particularly heavily on several economically and rate-sensitive areas. The consumer discretionary (-1.4%) and consumer staples (-0.9%) sectors finished with sizable losses, while the utilities (-1.2%) and real estate (-1.1%) sectors also struggled.

The industrials sector (-1.5%) finished at the bottom of the sector standings, with Vertiv (VRT 262.87, -27.96, -9.61%) among the more pronounced laggards.

Casey's General (CASY 629.03, -104.46, -14.24%) was another notable decliner, finishing as the weakest S&P 500 components following its earnings report. The company exceeded EPS and revenue expectations, but the reaction reflected some disappointment surrounding its inside operations and outlook for the remainder of the year.

The information technology sector (-0.2%) once again held up considerably better than the broader market as semiconductor stocks extended their recent relative strength. The PHLX Semiconductor Index gained 0.4%, with several semiconductor names ranking among the better-performing S&P 500 components, although weakness in NVIDIA (NVDA 223.79, -1.94, -0.86%) limited the group's contribution.

Apple (AAPL 315.34, -0.88, -0.28%) briefly moved into positive territory during the afternoon following the company's product event before ultimately finishing the session lower. Apple introduced the iPhone Duo, its first foldable iPhone, along with the iPhone 18.

Meta Platforms (META 653.69, +40.21, +6.55%) remained the standout among the mega-cap stocks following the debut of its Muse personal AI agent. Its sizable gain helped limit the communication services sector's decline to 0.3% despite weakness in Alphabet (GOOG 328.38, -7.00, -2.09%) and sharp losses in Comcast (CMCSA 24.59, -1.74, -6.61%) and Charter Comm (CHTR 133.89, -11.85, -8.13%) . The latter two came under pressure after Comcast highlighted heightened "competitive intensity" during comments at the Goldman Sachs Communacopia + Technology Conference.

By the close, the scattered strength in semiconductors and META had done little to change the broader complexion of the session. Small- and mid-cap stocks underperformed, 10 of the 11 S&P 500 sectors declined, and the energy sector's gain largely reflected the same surge in crude oil that weighed on much of the rest of the market. With Treasury yields also moving higher, Wednesday's action extended the broadly defensive start to the abbreviated week.

U.S. Treasuries finished Wednesday with losses across the curve, which produced fresh 2026 highs in yields on the 10-year note and shorter tenors. Treasuries climbed off their opening lows with the long bond leading the way, but that move was rebuffed after the U.S. Treasury specified its increased buyback plans. Treasuries reached lows shortly after the news, recovering some of their losses as the day went on. The bounce received some short-lived support from an excellent $38 billion 10-year note sale, but shorter tenors returned to their lows ahead of the close. The 2-year note yield settled up three basis points to 4.43%, and the 10-year note yield settled up three basis points to 4.84%. 

Reviewing today's data: 

• Weekly MBA Mortgage Applications Index -2.7%; Prior 0.8%

Thursday:

The major averages extended their losing streak to three sessions on Thursday as another surge in crude oil, rising Treasury yields, and heightened expectations for a rate hike continued to weigh on equities. The S&P 500 (-0.6%), Nasdaq Composite (-0.7%), and DJIA (-0.6%) finished with similar losses, while the Russell 2000 (-1.0%) and S&P Mid Cap 400 (-0.9%) underperformed.

Oil prices remained at the center of the market's concerns and continued climbing throughout the afternoon as an off-ramp to the U.S.-Iran conflict remained elusive. WTI crude settled $6.32 higher (+6.6%) at $102.30 per barrel, bringing its gain for the holiday-abbreviated week to roughly 11.5%. The latest advance compounded the oil-driven pressure that has weighed on equities throughout the week. Treasury yields presented another obstacle, with the 10-year note yield climbing 11 basis points to 4.94%.

Expectations for tighter monetary policy also increased following this morning's August Producer Price Index. Headline PPI rose 0.4% month-over-month, matching the Briefing.com consensus, while core PPI increased a slightly cooler-than-expected 0.2% (Briefing.com consensus: 0.3%). However, upward revisions to the July readings and an acceleration in year-over-year producer inflation reinforced expectations for a possible rate hike at next week's FOMC meeting. The CME FedWatch Tool assigned a 73.1% probability to a rate hike following the report, up from 61.2% yesterday.

The pressure remained widespread through the close, with nine of the 11 S&P 500 sectors finishing lower. The materials sector (-1.5%) ended at the bottom of the standings amid declining precious metal prices with particular weakness in copper.

Meanwhile weakness in the information technology sector (-0.9%) had an outsized influence on the major averages. Semiconductor stocks were a particular source of weakness after providing relative support during the first two sessions of the week. The PHLX Semiconductor Index dropped 2.7%, with NVIDIA (NVDA 218.40, -5.27, -2.36%) among the notable mega-cap laggards. Taiwan Semiconductor Manufacturing (TSM 428.31, -7.05, -1.62%) also declined despite reporting a 53.3% year-over-year increase in August revenue to NT$514.81 billion, as the stock gave back some ground following its strong recent run.

Skyworks (SWKS 84.03, +7.49, +9.79%) and Qorvo (QRVO 112.36, +7.12, +6.77%) bucked the broader semiconductor weakness, however, as shares rallied amid increased investor optimism that their proposed merger will ultimately close.

Earnings-related selling added to the weakness in several individual names. Cooper (COO 54.17, -9.31, -14.67%) fell sharply after its Q3 revenue miss and downside Q4 guidance highlighted a steeper near-term slowdown at CooperVision. American Eagle (AEO 14.54, -2.35, -13.91%) was another pronounced laggard following its quarterly results, as continued softness at the American Eagle brand and a modest reduction to back-half operating income expectations overshadowed strength at Aerie. Several other apparel stocks traded lower in sympathy.

There were some pockets of strength outside the technology sector. Reddit (RDDT 155.36, +8.92, +6.09%) ranked among the better-performing S&P 500 components, while Comcast (CMCSA 25.17, +0.58, +2.36%) and CHTR rebounded from Wednesday's declines. Both stocks had come under pressure in the prior session after Comcast highlighted heightened "competitive intensity" during comments at the Goldman Sachs Communacopia + Technology Conference. The communication services sector finished 0.3% higher, while the consumer staples sector (+0.2%) also finished modestly higher.

Attention now turns to a pair of potentially significant catalysts. Oracle (ORCL 153.17, -8.46, -5.23%) reports earnings after today's close and faces elevated expectations surrounding its rapidly expanding AI infrastructure business and massive data center buildout. Investors will be looking for continued cloud acceleration as new capacity comes online, along with evidence that the company's heavy infrastructure investment is progressing as planned.

Tomorrow morning's August CPI report (Briefing.com consensus: 0.4%) carries even broader implications. The report is widely viewed as a key deciding factor in whether the Fed raises rates or remains on hold at next week's FOMC meeting, putting inflation and the policy outlook squarely in focus following three consecutive losing sessions for the stock market.

Selling in U.S. Treasuries on Thursday produced yet another round of fresh 2026 highs in yields on notes and bonds of all tenors.  Today's strong 30-year bond reopening briefly returned the 30-year yield to its opening level before late pressure lifted that yield to within five basis points of its high from 2007 (5.408%). The 2-year note yield settled up 12 basis points to 4.55%, and the 10-year note yield settled up 11 basis point to 4.94%.

Reviewing today's data: 

• August PPI 0.4% (Briefing.com consensus 0.4%); Prior was revised to 0.1% from 0.0%, August Core PPI 0.2% (Briefing.com consensus 0.3%); Prior was revised to 0.3% from 0.2%
  • The key takeaway from the report is that while the slightly cooler-than-expected core PPI was a positive sight, it was essentially masked by the upward revisions to readings for July, so this report reinforces the market's expectations for a rate hike as early as next week.
• Weekly Initial Claims 206K (Briefing.com consensus 208K); Prior was revised to 207K from 206K, Weekly Continuing Claims 1.774 mln; Prior was revised to 1.775 mln from 1.779 mln
  • The key takeaway from the report is that initial claims remain locked in a narrow range right on their four-week moving average, signaling little overall change in layoff activity.
• August Existing Home Sales 3.98 mln (Briefing.com consensus 4.03 mln); Prior 4.06 mln
  • The key takeaway from the report is that home sales remain pressured by high mortgage rates and limited inventory, especially at the lower end. Sales of homes priced at $500,000 and below have faced the most pressure while sales of homes priced over $1 million have were up 3.9% year-over-year in August.
• July Wholesale Inventories 1.3% (Briefing.com consensus 1.3%); Prior was revised to 0.4% from 0.2%

Friday:

The major averages snapped a four-session losing streak on Friday, ending the holiday-shortened week with a broad rebound as lower oil prices and renewed strength in technology stocks outweighed increased expectations for a rate hike next week. The S&P 500 (+0.9%), Nasdaq Composite (+1.0%), and DJIA (+1.0%) held sizable gains through the close, while the Russell 2000 (+0.5%) and S&P Mid Cap 400 (+0.8%) also finished higher. Despite the rebound, the major averages still ended firmly lower for the week.

A pullback in crude oil offered some relief from one of the market's biggest headwinds of the past several sessions. WTI crude settled $2.31 lower (-2.3%) at $100.08 per barrel, trimming its advance for the week to roughly 10%. The retreat came amid reports that Gulf states will meet with Iran on Monday to discuss the Strait of Hormuz, providing some optimism for a potential de-escalation after crude surged above $102 per barrel on Thursday.

Perhaps more notable was the market's ability to rally despite an August CPI report that further strengthened expectations for tighter monetary policy. Total CPI increased 0.4% month-over-month, as expected, while core CPI rose a slightly hotter-than-expected 0.3% (Briefing.com consensus: 0.2%). The CME FedWatch Tool now assigns an 86.5% probability to a 25-basis-point rate hike at Wednesday's FOMC meeting, compared with 69.4% immediately before this morning's report.

Technology and other growth stocks supplied much of Friday's leadership. The communication services (+1.4%) and information technology (+1.1%) sectors were among the better performers as Alphabet (GOOG 335.45, +5.06, +1.53%) and Apple (AAPL 332.27, +5.70, +1.75%) moved higher, with the Vanguard Mega Cap Growth ETF advancing 0.9%.

Semiconductor stocks also bounced back from Thursday's sharp decline, lifting the PHLX Semiconductor Index 1.8%. Oracle (ORCL 150.15, -2.79, -1.82%) provided an important read-through for the AI infrastructure trade despite failing to hold its own early advance. Shares initially jumped by double digits following the company's quarterly report before giving back the gain, but 121% year-over-year cloud infrastructure revenue growth, more than $30 billion in new AI-cloud contracts, and maintained FY27 capital spending plans reinforced expectations for continued data center investment. That outlook fueled sizable gains in Dell (DELL 567.14, +60.52, +11.95%), Hewlett Packard Enterprise (HPE 62.08, +6.86, +12.42%), and other related names as investors anticipated sustained demand for servers, networking equipment, and storage.

The advance was not confined to the technology complex. The industrials (+1.1%) and consumer discretionary (+1.1%) sectors also finished among the outperformers, helping give the rebound a relatively broad foundation.

Defensive groups moved in the opposite direction, with the health care (-0.1%) and utilities (-0.3%) sectors finishing as the day's laggards.

Friday's rebound ultimately recovered a meaningful portion of the losses accumulated earlier in the week, but it was not enough to prevent a firmly lower weekly finish for the major averages. The session also showed that investors were willing to look through a less favorable rate outlook when some pressure from crude oil subsided and technology leadership reemerged. Attention now shifts squarely to Wednesday's FOMC decision, where the market is assigning an 86.5% probability to a 25-basis-point rate hike.

U.S. Treasuries had a mostly lower finish to a rough week that saw yields on all notes and bonds hit fresh highs for the year amid firming expectations for a rate hike next week. The 2-year note yield settled up nine basis points to 4.64% (+26 basis points this week), and the 10-year note yield settled up three basis points to 4.98% (+20 basis points this week). 

Reviewing today's data:

• August CPI 0.4% (Briefing.com consensus 0.4%); Prior 0.1%, August Core CPI 0.3% (Briefing.com consensus 0.2%); Prior 0.2%
  • The key takeaway from the report is that it wasn't good enough to put September rate-hike fears to rest.
• September Univ. of Michigan Consumer Sentiment - Prelim 47.8 (Briefing.com consensus 51.5); Prior 51.7
  • The key takeaway from the report is the dour outlook embedded in the index of consumer expectations, which was plagued by a worsening outlook for personal finances and business conditions.
• The U.S. Treasury reported a $166.8 bln deficit for August (Briefing.com consensus -$485.0 bln). The Treasury Budget data is not seasonally adjusted so the August deficit cannot be compared to the July deficit of $432.3 bln. The deficit a year ago was $344.8 bln.
  • The key takeaway is that the August deficit looked much better on the surface, but the underlying fiscal picture remains largely unchanged. The August deficit was down 52% yr/yr, but calendar shifts and lower tariff-refund outlays explain much of the improvement, while the fiscal YTD deficit remains near a record $1.97 trln and interest costs are up 13% yr/yr.