Weekly Market Update September 8, 2026

The economy should make measured progress this year. According to the Commerce Department, Gross Domestic Product (GDP) expanded at an estimated annualized rate of 2.1% in the first quarter, followed by a 1.5% gain in the second quarter. We anticipate a stable showing for the remainder of 2026, assuming the consumer remains resilient in the face of elevated borrowing costs and businesses continue to invest in new technologies. Meanwhile, the employment market has softened somewhat lately, possibly due to cautious employer sentiment. For now, the unemployment rate remains at about 4.0%, which is low by historic standards. (The August jobs report was due out just after we published this report.) 

The Federal Reserve is in a tough spot. The Fed has left interest rates unchanged at 3.50%-3.75% so far in 2026, offering support for the economy. However, inflation has remained stubbornly elevated. The core Personal Consumption Expenditures (PCE) Price Index, which excludes fuel and food items, showed prices rose 3.3% in July, on a year-over-year basis. At the annual Jackson Hole Economic Symposium, Fed Chairman Kevin Warsh warned that inflation remains above the central bank’s 2.0% target, indicating that a rate hike could be on the horizon. At this juncture, there is a roughly 65% chance of a 0.25% hike at the upcoming September meeting. 

Second-quarter earnings showed marked improvement, with the S&P 500 Index companies delivering a roughly 50% profit increase (still above 30% when excluding non-operating gains posted by Alphabet and Amazon). Energy companies benefited from a dramatic rise in oil prices due to supply disruptions, while technology companies got a boost from spending on AI (Artificial Intelligence). 

The market seems to be holding up well, despite patches of volatility. As of this writing, the S&P 500 Index was still not far from record high ground. Of note, many big technology issues have lost some luster due to concerns about valuations and unsustainable spending budgets. On the bright side, investors have been rotating capital into overlooked sectors, such as healthcare, financials, and energy, leading to larger numbers of stocks notching gains day to day. 

Source: Valueline.com