Weekly Market Navigator

Week of September 8, 2026

Published every Monday: Get a detailed snapshot of what moved the markets last week—and what to watch this week.

Strong Employment Report Returns Focus to Inflation

Stock markets were essentially flat last week. Elevated oil prices led to a 2 percent rally in the energy sector. The consumer discretionary sector was the worst-performing part of the market, declining 2 percent. Bond markets were modestly lower as yields on long-term Treasuries rose.

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Weekly Quick Hits

Beyond the Headlines

Strong Employment Report Returns Focus to Inflation

Report Releases

The creation of 162,000 jobs in August was encouraging for the economy.

Financial Market Data

Stocks were essentially flat, masking considerable daily volatility.

Looking Ahead

We expect updates on producer and consumer prices this week.

BEYOND THE HEADLINES:

Strong Employment Report Returns Focus to Inflation

At the recently concluded Jackson Hole Economic Policy Symposium, Federal Reserve (Fed) Chair Kevin Warsh described the labor market as being stable and consistent with the central bank’s goal of maximum employment. The August employment report, released Friday, may have proved him correct. After a disappointing employment report in July, last month’s improved data refocused Fed policy discussions on inflation. This week’s reports will be critical to discussions at the Fed’s meeting next week.

Job Creation Rebounds
So far this year, the labor market has alternated between weakness and strength. That pattern continued with the August employment report, which showed strength across the board. Expectations were that the U.S. economy would create 55,000–60,000 jobs; instead, it created 162,000. In addition, data from June and July was revised higher by a combined 55,000 jobs. Although employment reports have been volatile, the August release takes the weakening jobs market narrative off the table for now.

Inflation Expected to Accelerate
Despite improvements in the growth rate of consumer and producer inflation over the past couple of months, inflation remains well above the Fed’s 2 percent target. (Inflation hasn’t been that low in more than five years.) The Consumer Price Index (CPI) and Producer Price Index (PPI) are expected to accelerate again as oil and gas prices have moved higher.

If these expectations are accurate, the Federal Open Market Committee (FOMC) will meet in September with inflation still far above its target. At the same time, a stable and potentially improving labor market might set the stage for the FOMC to increase interest rates.

Is the Market Ready for a Rate Increase?
Despite markets selling off after the August employment report on fears that the Fed would raise rates, expectations for a rate increase have exceeded 50 percent for some time and are currently at 60 percent.

Concerns about the Fed raising interest rates, which have weighed on investors for most of 2026, have intensified since Warsh became chair in May. Markets could breathe a sigh of relief if the Fed raises rates this month. In this scenario, markets could rally after the uncertainty of a rate hike is lifted, allowing investors to focus again on the strong fundamentals underlying the market.

“Expectations were that the U.S. economy would create 55,000 - 60,000 jobs; instead, it created 162,000. In addition, data from June and July was revised higher by a combined 55,000 jobs.”

Report Releases: August 31–September 4, 2026

ISM Manufacturing Index:
August (Tuesday)

Although manufacturing activity fell last month, the index remained solidly in expansionary territory, indicating continued growth for manufacturers.

Expected/prior month ISM Manufacturing index: 55.2/55.6
Actual ISM Manufacturing index: 54.6

ISM Services Index:
August (Thursday)

Service sector confidence improved last month due to a rise in new orders. Despite the improvement in the index, the employment subindex slid further into contractionary territory.

Expected/prior month ISM Services index: 54.1/54.1
Actual ISM Services index: 55.4

Employment Report:
August (Friday)

Hiring rebounded last month, with 162,000 jobs added, well above expectations. The unemployment rate remained unchanged at 4.1 percent.

Expected/prior change in nonfarm payrolls: +55,000/+21,000
Actual change in nonfarm payrolls: +162,000

The Takeaway

It was a strong week for economic data, with manufacturing and services confidence remaining in expansionary territory.
The highlight was a strong August employment report, with 162,000 jobs created. This encouraging sign may allow the Fed to refocus on reining in inflation.

Financial Market Data

Equity

Stocks swung between gains and losses, with major indices closing the week essentially unchanged. The Dow Jones Industrial Average dipped slightly while the Nasdaq Composite, S&P 500, and Russell 2000 were marginally higher. Oil prices rose 10 percent, helping the energy sector rally by more than 2 percent. The technology sector rose more than 1 percent. Declining sectors included consumer discretionary, materials, real estate, and industrials, each of which declined 1 percent–2 percent. International developed markets and emerging markets outperformed U.S. equities.

Fixed Income

Bond markets moved lower as yields across the Treasury curve rose on the strength of the employment report. The 10-year Treasury yield rose 5 basis points (bps) to 4.79 percent, the 2-year yield increased 2 bps, and the 30-year yield moved above 5.2 percent again. The move resulted in a flattening of the yield curve. Core bonds, Treasuries, and mortgages were down slightly, and the municipal market underperformed.

The Takeaway

Stocks were essentially unchanged. Crude oil prices rallied 10 percent, lifting the energy sector. Consumer discretionary was the worst-performing sector.
Fixed income markets were marginally lower, with Treasury yields moving higher.

Looking Ahead

Economists and investors will turn their attention to inflation data, with updates on producer and consumer prices expected this week.

The week kicks off on Thursday with the PPI report for August. Producer prices are expected to rise after a couple of months of slower growth.
On Friday, we’ll see the CPI report for August. Consumer prices are also expected to rise, which could indicate that inflation is reaccelerating.
Lastly, also on Friday, we’ll see the preliminary University of Michigan consumer sentiment survey for September. Sentiment is expected to be mostly unchanged.

Disclosure: This material is intended for informational/educational purposes only and should not be construed as investment advice, a solicitation, or a recommendation to buy or sell any security or investment product. Diversification does not assure a profit or protect against loss in declining markets, and diversification cannot guarantee that any objective or goal will be achieved. Please contact your financial professional for more information specific to your situation.

Bonds are subject to availability and market conditions; some have call features that may affect income. Bond prices and yields are inversely related: when the price goes up, the yield goes down, and vice versa. Market risk is a consideration if sold or redeemed prior to maturity.

Certain sections of this commentary contain forward-looking statements that are based on our reasonable expectations, estimates, projections, and assumptions. Forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties, which are difficult to predict. All indices are unmanaged and are not available for direct investment by the public. Past performance is not indicative of future results. The S&P 500 is based on the average performance of the 500 industrial stocks monitored by Standard & Poor’s. The Nasdaq Composite Index measures the performance of all issues listed in the Nasdaq Stock Market, except for rights, warrants, units, and convertible debentures. The Dow Jones Industrial Average is computed by summing the prices of the stocks of 30 large companies and then dividing that total by an adjusted value, one which has been adjusted over the years to account for the effects of stock splits on the prices of the 30 companies. Dividends are reinvested to reflect the actual performance of the underlying securities. The MSCI EAFE Index is a float-adjusted market capitalization index designed to measure developed market equity performance, excluding the U.S. and Canada. The MSCI Emerging Markets Index is a market capitalization-weighted index composed of companies representative of the market structure of 26 emerging market countries in Europe, Latin America, and the Pacific Basin. The Russell 2000® Index measures the performance of the 2,000 smallest companies in the Russell 3000® Index. The Bloomberg US Aggregate Bond Index is an unmanaged market value-weighted performance benchmark for investment-grade fixed-rate debt issues, including government, corporate, asset-backed, and mortgage-backed securities with maturities of at least one year. The U.S. Treasury Index is based on the auctions of U.S. Treasury bills, or on the U.S. Treasury’s daily yield curve. The Bloomberg US Mortgage Backed Securities (MBS) Index is an unmanaged market value-weighted index of 15- and 30-year fixed-rate securities backed by mortgage pools of the Government National Mortgage Association (GNMA), Federal National Mortgage Association (Fannie Mae), and the Federal Home Loan Mortgage Corporation (FHLMC), and balloon mortgages with fixed-rate coupons. The Bloomberg US Municipal Index includes investment-grade, tax-exempt, and fixed-rate bonds with long-term maturities (greater than 2 years) selected from issues larger than $50 million. One basis point is equal to 1/100th of 1 percent, or 0.01 percent.

Authored by the Investment Research team at Commonwealth Financial Network^®.

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