September 2, 2026

Interest rates and the Fed remain the key risk for markets right now and will likely determine if stocks go through a correction during the upcoming seasonally weak period. Seasonal factors around politics and initial year-ahead guidance are not likely to pack much punch. Fresh shipping disruptions in the Persian Gulf contributed to a defensive tone this week, overshadowing additional calls from Tehran to return to the prior memorandum of understanding.  

 

Topics of the week: 

  • Broader Market Leadership. Market gains are no longer being driven by only a handful of large technology companies. More sectors and industries are participating, which can create a healthier and more durable investment environment.

  • Cash-Generating Businesses Are Being Rewarded. Investors are placing greater value on companies that produce strong free cash flow, which is the cash remaining after funding operations and growth investments. Historically, businesses with consistent cash generation have often been better positioned to navigate changing economic conditions.

What we are watching:

  • Focus on Business Quality, Not Style Labels. The most important distinction today is not "value" versus "growth." Instead, investors should focus on companies that can fund their own growth and create economic value over time.

  • The Value Rotation Appears Fundamentally Driven. We believe the recent strength in value-oriented stocks reflects more than a short-term market swing. It appears tied to a changing investment environment where profitability, capital discipline, and cash generation are most important.

 

Index Data & Market Performance

 

Data as of Market Close  8.31.26 

source: gemini.google.com*

In Focus

The upcoming August Jobs Report represents a critical threshold for Wall Street, as it could decisively tilt the Federal Reserve toward a September interest rate decision. Chair Warsh explicitly stated that the labor market is "quite stable" and consistent with full employment. He emphasized that the Fed's primary focus must remain on tackling prices.

Key Reports:

Tuesday – ISM Manufacturing Index, JOLTS Job Openings

Wednesday – ADP Employment Report 

Thursday – Weekly Jobless Claims, U.S. Trade Balance

Friday – Unemployment Rate, Nonfarm Payrolls, Average Hourly Earnings
 

What's Trending: Special Edition - Reading the Rate Signals

 

Author: David Meier, OCIO Services Consultant

In this week's news section, we feature insights from our Chief Investment Officer, David Meier. David provides an informative analysis of current market trends and forecasts, drawing on his extensive experience and thorough research to deliver a well-rounded perspective on the market landscape.

U.S. equity markets have delivered impressive gains in 2026, but as we look ahead to the end of the year, interest rates and bond yields are dominating the headlines.  Treasury yields have climbed to multi-year highs, creating both challenges and opportunities.  While this situation can sound complex, we wanted to outline two key drivers:

Treasury has signaled future intervention in the bond markets. In an effort to help stabilize interest rates, Treasury Secretary Scott Bessent indicated the US Treasury plans to purchase long-dated treasuries.  This liquidity is designed to help influence longer-term interest rates downward.

Fed Chair Warsh’s positioning is difficult given the inflation picture. Investors continue to closely monitor inflation and labor market data for clues on whether the Federal Reserve can remain on hold or not. These expectations matter because interest rates influence everything from borrowing costs and corporate investment decisions to stock valuations and consumer demand. Higher yields can place pressure on equity valuations by increasing discount rates and financing costs (see chart below), but they also provide more attractive income opportunities for bond investors.

 

 

Bottom line. Economic growth and corporate earnings have remained supportive of stock prices and investors have benefitted from the development of artificial intelligence. While we think yields will ease, we continue to closely monitor these key drivers as potential risks that could influence investment returns for our clients. Interest rates will remain in focus into the mid-terms and beyond as we assess our effectiveness in managing inflation.

 

 

Disclosures

*The data for the total returns of the S&P 500, Dow Jones 30, and NASDAQ Composite are compiled and published by several financial news outlets, index providers, and government/academic sources.

Based on typical financial data providers and the search results, here are the likely sources for this data:

  • S&P Dow Jones Indices (S&P Global): This is the official index calculator for the S&P 500 and the Dow Jones Industrial Average (DJIA). They publish index data, including total returns, in daily, weekly, and monthly reports/commentary.
  • Nasdaq Global Indexes: They are the official index calculator for the NASDAQ Composite. They also publish fact sheets and performance reports with total return data.
  • Financial News Agencies and Publications: News outlets like The Associated Press (AP) and financial publications like Investopedia regularly report on the daily, weekly, and year-to-date (YTD) returns of these major U.S. indexes.
  • Federal Reserve Economic Data (FRED) / St. Louis Fed: FRED, maintained by the Federal Reserve Bank of St. Louis, is a public resource that often includes daily closing levels for indices like the S&P 500, which can be used to calculate returns.
  • Financial Data Platforms (e.g., Bloomberg, YCharts, MSCI): Professional and commercial financial data providers often republish or calculate returns based on the official index data for their clients.