Market Update – August 31, 2026

Financial Markets

Stocks posted a positive week as strong NVIDIA earnings helped drive markets higher before gains moderated Friday following hawkish monetary policy comments from Fed Chair Kevin Warsh at Jackson Hole. As of Friday’s close, the Nasdaq Composite gained 0.85% for the week, while the Dow Jones Industrial Average and S&P 500 advanced 0.53% and 0.49%, respectively.

Source: Y-Charts

Market News

Jackson Hole Fed Speech

Federal Reserve Chair Kevin Warsh used his Jackson Hole Symposium speech last Friday to take a hawkish stance on inflation. Warsh reaffirmed the Fed’s 2% PCE inflation target and emphasized that elevated prices remain the central bank’s primary focus.

He noted that over the past year, more than half of the items tracked in the PCE saw price increases above 3%. While this is down from a post-pandemic high of 77%, it remains well above the 32% average seen in the 20 years before the pandemic. Warsh also warned that the recent rise in commodity prices needs to be closely monitored.

The shift in tone has put the September FOMC meeting firmly in focus. Going into the speech, futures markets were pricing in a 64.6% probability of a September rate hold. Following the speech, expectations flipped, with markets now pricing in a 57.5% probability of a rate hike. August CPI and PPI, due the week before the September 16th FOMC meeting, could still shift expectations, keeping the Fed a key focus for markets over the coming month.

Source: CME Group FedWatch, as of 8/28/26

PCE Inflation

Ahead of Friday’s Jackson Hole Symposium, July’s PCE data showed that inflation remained persistent last month. Headline PCE came in slightly higher than expected at 3.7% annually, while core PCE, which excludes food and energy, was in line with expectations at 3.3%. Both measures were unchanged from June. On a monthly basis, both headline and core prices rose 0.2% in July.

Within the PCE report, goods prices declined 0.1% in July, while services prices increased 0.3%. Among services categories, financial services prices posted the largest monthly gain, rising 1.2%, though this component can be relatively volatile.

Inflation continues to be a risk for markets and the Fed’s path forward. If the conflict with Iran continues and energy prices remain elevated, there is a greater risk that higher energy costs could push inflation higher and slow progress toward the Fed’s 2% target.

Source: US Bureau of Economic Analysis

Personal Income, Spending, & Saving

The personal savings rate improved in July as income growth outpaced spending for the first time since January. Disposable personal income rose 0.5% during the month, while consumer spending increased a more modest 0.2%. As a result, the personal savings rate rose to 3%, marking its first monthly increase of the year.

The pickup in income growth is encouraging, although the slower pace of spending is worth monitoring. Some of the weakness may be distorted by the timing of Amazon Prime Day in June, which boosted spending that month and similarly affected July’s monthly retail sales data. Looking ahead, we will continue to monitor income and spending trends as an important gauge of the financial health of the consumer.

Source: US Bureau of Economic Analysis

Nvidia Earnings

Nvidia reported earnings last week, delivering another strong quarter that reinforced the company’s role at the center of the AI buildout. The largest publicly traded U.S. company reported adjusted earnings per share of $2.22, ahead of the $2.10 estimate, while revenue came in at $96.22 billion compared with expectations of $92.17 billion. Revenue in fiscal Q2 2026 was roughly double the level reported in Q2 2025, highlighting the continued strength of demand for the chipmaker.

The company also issued revenue guidance that topped analyst estimates, further supporting the AI growth narrative. Shares rose as much as 10% Thursday following the report as investors responded to the better-than-expected results and outlook.

Source: Y-Charts

Consumer Confidence

Consumer confidence slipped slightly in August, with the Conference Board Consumer Confidence Index falling 0.8 points to 89.4 from 90.2 in July. However, the headline decline masks a notable divergence between consumers’ views of current conditions and their expectations for the future. The Present Situation Index actually rose 6.8 points to 121.2, its first increase after three consecutive monthly declines. Consumers became more positive about current business and labor market conditions, with the share reporting that jobs are “plentiful” increasing significantly.

The Expectations Index moved in the opposite direction, falling 5.8 points to 68.2. Consumers became less optimistic about future business conditions, household income, and the labor market. The divergence suggests that while consumers feel somewhat better about the economy today, they remain cautious about where things are headed, as elevated price levels and persistent gas prices continue to weigh on sentiment.

Source: The Conference Board

Summary

Markets finished the week modestly higher as strong NVIDIA earnings reinforced the ongoing AI growth narrative, while July PCE data showed inflation remaining persistent. Attention shifted to Federal Reserve policy following a hawkish Jackson Hole speech from Chair Kevin Warsh, which increased expectations for a potential September rate hike, while consumer data showed a mixed picture with income growth outpacing spending but confidence remaining subdued.

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