Coverage: August 26–September 1, 2026
Wall Street closed August with a bruise rather than a break. On Monday, the Dow fell 0.70%, the S&P 500 slipped 0.33%, and the Nasdaq eased 0.12% as renewed U.S.-Iran fighting pushed Brent crude to $90.49 a barrel and sent the 10-year Treasury yield as high as 4.768%. The inflation trade came back quickly: higher energy costs, higher yields, and a tougher path for rate-sensitive assets.
Zoom out one click and August still belonged to the bulls. The S&P 500 gained 2.6% for the month, the Nasdaq rose 3.9%, and the Dow added 1.3%. The contrast matters. Investors absorbed another geopolitical flare-up and a hawkish Fed reset without abandoning equities, though Monday showed how quickly oil can become a rates story when inflation is already running hot.
The Fed’s preferred inflation gauge moved the wrong way in July. Headline PCE rose 3.7% from a year earlier and core PCE rose 3.3%, while real consumer spending was essentially flat for the month. Personal income increased 0.4%, leaving households with more income but little real spending growth after inflation.
The second estimate of second-quarter GDP held at a 1.5% annualized pace, down from 2.1% in the first quarter. Private domestic demand looked firmer than the headline, with real final sales to private domestic purchasers revised up to a 4.2% annualized rate. Translation: the economy is still expanding, yet inflation is making that growth harder for the Fed to celebrate.
Fed Chair Kevin Warsh used his first Jackson Hole address to draw a brighter line around the central bank’s 2% PCE target. He said inflation remained too high, described broad financial conditions as difficult to call restrictive, and said policymakers would have “work to do” unless underlying inflation moved toward target clearly and fast enough. His Jackson Hole remarks also emphasized that 2% remains a firm, fixed target.
Markets heard the message. The two-year Treasury yield jumped 11 basis points Friday to 4.34%, and by Monday markets were pricing more than a 65% probability of a September rate increase. Warsh stopped short of pre-committing to a hike, but the burden of proof shifted: softer inflation or weaker labor data now carries more weight heading into the September meeting.
Nvidia’s quarterly numbers managed to clear a bar Wall Street keeps raising. Fiscal second-quarter revenue reached $96.22 billion, data-center revenue more than doubled to $89 billion, and the company guided third-quarter revenue to roughly $108 billion. Then came the figure that grabbed the room: management expects fiscal 2028 revenue to grow about 70%, far above the 44% growth analysts had projected.
The bigger story is the spending cycle around the chipmaker. Microsoft, Meta, and other major technology companies are expected to spend more than $730 billion on AI infrastructure this year, up sharply from roughly $400 billion last year. Nvidia’s results kept the AI demand thesis intact, while memory shortages and rising component costs served as a reminder that even a boom can run into a supply chain.
U.S.-Canada trade negotiations broke down with fresh tariffs attached. Washington imposed 50% duties on about $20 billion of Canadian imports, while Canada announced matching tariffs on roughly $20 billion of U.S. goods beginning September 8. Trump also threatened a 50% tariff on Canadian automobiles and parts beginning January 1, adding another potential pressure point for the deeply integrated North American auto industry.
For markets, the issue reaches beyond bilateral politics. Canada is deeply embedded in U.S. manufacturing, energy, agriculture, and automotive supply chains. Higher cross-border costs can filter into producer prices and margins at the same moment the Fed is looking for cleaner evidence that inflation is cooling.
The U.S. Open opened with the kind of first round that makes a bracket look decorative. Unseeded Mariano Navone knocked out fourth-seeded Novak Djokovic in five sets, handing the 24-time major champion his first opening-round loss at the U.S. Open and his earliest Grand Slam exit since 2006.
Carlos Alcaraz returned from a four-month wrist injury and won in straight sets, while Aryna Sabalenka began her pursuit of a third consecutive U.S. Open title with a straight-set victory. Stan Wawrinka, 41, also played the final Grand Slam match of his career, closing a two-decade run at the tournament where he won the 2016 title.