Market View: Week of Aug. 28, 2026
ECONOMIC REVIEW¹
Real Gross Domestic Product (GDP) for the second quarter remained unchanged at a 1.5% annualized rate.
Upward revisions to personal consumption and business investment were offset by small downward revisions to net exports, inventories, and government purchases.
“Core” GDP, which focuses on consumer spending, business fixed investment, and residential construction while excluding inventories, government outlays, and trade, can provide a clearer picture of underlying growth.
This measure was revised higher to a 4.2% annualized rate from an initial 3.9%, marking the fastest pace since early 2023. Core GDP is now up 2.7% from a year ago.
Volatile swings in trade figures are the primary reason for the difference between headline and core readings, and this category cut 1.1% from the headline reading in Q2.
Personal Consumption Expenditure (PCE) prices rose 0.2% in July, though remained at 3.7% on an annualized basis.
“Core” prices, the Federal Reserve’s (the Fed) preferred inflation metric, also rose 0.2% in July, and the year-ago comparison now stands at 3.3% – still well above the Fed’s 2% target.
In Kevin Warsh’s first speech at the Jackson Hole Economic Symposium on Friday, the Fed Chairman importantly reiterated 2% PCE inflation as a firm target and outlined his thoughts on four main topics: AI’s economic implications, forward guidance, guiding principles for policy, and a current assessment of the U.S. economic environment.
Warsh defined current economic conditions as resilient, with strong capital expenditures, robust corporate profits, and healthy consumer spending, but conceded that the Fed may not be done fighting inflation.
How does the most recent economic data impact you?
Although Q2 GDP remained at just 1.5% with the second revision, an arguably more important piece of data in this report addressed economy-wide corporate profits, which posted the largest increase in five years.
Profits jumped 9.1% in the second quarter and are now up 22.8% from a year ago.
While PCE inflation remains elevated, personal income rose 0.4%, easily beating the consensus expected +0.2%.
A 3.8% increase in private sector wages over the past year is certainly a positive for American workers, but inflation is up 3.7% over the same period, so consumers’ purchasing power is essentially unchanged.
Although Chairman Warsh’s Jackson Hole speech did dispel some investor concerns, traders still raised the odds of a rate hike to around 60% from 35%.
A LOOK FORWARD¹
Jobs and the labor market will be the focus for investors this week with the Job Openings & Labor Turnover Survey (JOLTS), ADP National Employment Report, and the Employment Report highlighting economic data releases.
How does this week’s slate of economic data impact you?
While the labor market still appears quite strong, these critical reports always have the ability to move markets.
Chairman Warsh reiterated that the primary focus at the Fed is inflation, but meaningfully weak or strong job reports will impact the central bank’s view on whether a rate hike will be necessary.
MARKET UPDATE²
| Market Index Returns as of 8/28/26 | WTD | QTD | YTD | 1 YR | 3 YR | 5 YR |
|---|---|---|---|---|---|---|
| S&P 500 | 0.50% | 3.00% | 13.51% | 20.78% | 21.28% | 12.94% |
| NASDAQ | 0.85% | 0.79% | 14.03% | 23.78% | 24.55% | 12.60% |
| Dow Jones Industrial Average | 0.55% | 2.57% | 12.58% | 19.46% | 17.47% | 10.67% |
| Russell Mid-Cap | -1.03% | 1.74% | 17.31% | 18.54% | 17.16% | 8.12% |
| Russell 2000 (Small Cap) | -1.49% | -1.57% | 20.65% | 27.13% | 17.76% | 6.93% |
| MSCI EAF (International) | 0.11% | 4.41% | 14.27% | 22.11% | 18.60% | 9.51% |
| MSCI Emergin Markets | 0.05% | 0.35% | 24.28% | 39.47% | 22.99% | 8.83% |
| Bloomberg US Agg Bond | 0.13% | -0.83% | -0.21% | 1.99% | 4.15% | -0.27% |
| Bloomberg High Yield Corp. | 0.27% | 0.75% | 2.72% | 4.91% | 8.64% | 4.19% |
| Bloomberg Global Agg | -0.14% | 0.03% | -0.19% | 0.70% | 3.78% | -1.71% |
OBSERVATIONS
Major domestic indices delivered solid returns in a somewhat volatile week highlighted by critical economic data releases and punctuated by Fed Chairman Kevin Warsh’s first speech at the Jackson Hole Economic Symposium.
The S&P 500 (0.50%), the NASDAQ (0.85%), and the Dow Jones Industrial Average (0.55%) all produced meaningful positive weekly returns.
Down-cap equities struggled as both the Russell Mid-Cap and Russell 2000 indices pulled back more than 1% (nearly 1.5% for small-cap stocks) on the week.
Developed international and emerging market equities delivered marginally positive returns, improving 0.11% and 0.05%, respectively.
Domestic fixed income produced positive returns despite some yield volatility surrounding Chairman Warsh’s speech. The Bloomberg US Agg. and the Bloomberg High Yield Corp. indices improved 0.13% and 0.27%, respectively.
International bonds fell -0.14% on the week.
BY THE NUMBERS
The world’s No. 1 golfer just ended his agonizing season with a $10 million payday:
Scottie Scheffler’s season had defied all logic. Despite playing better than any other golfer around, Scheffler found himself incapable of winning. Entering the PGA Tour’s playoffs, he had gone the entire spring and summer without a single victory. That’s when Scheffler reminded the golf world why, even after a season without a major championship, he’s the game’s No. 1 player. He has his second Tour Championship to prove it. Scheffler’s win Sunday at East Lake Golf Club in Atlanta marked his second victory in three weeks since the playoffs began. The victory put the 30-year-old in elite company, alongside only Tiger Woods and Rory McIlroy as the only players with multiple cup titles. And for any of his peers who thought Scheffler’s struggles might be a sign of weakness, Scheffler showed the opposite: His arsenal now looks more complete than ever.³
Corporate America’s Profits Are Booming – and Signal More Good Times Ahead:
Profits are booming at America’s biggest companies—and their leaders say that likely won’t change soon. From Target and J.M. Smucker to farm-equipment maker Deere, companies spanning the breadth of the U.S. economy are ringing up heftier sales and earnings. In recent days, many have raised financial outlooks for the year, citing robust sales as just one of the reasons. Chalk the good times up to a confluence of fortunate events: red-hot artificial-intelligence spending, federal spending and the windfall companies are getting in the form of refunds of some of their past tariff payments. Plus, a booming stock market and high home values are helping many shoppers keep spending, even as plenty of others struggle to absorb rising prices.⁴
Disclosures
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1 Data obtained from Bloomberg as of 8/28/26.
2 Data obtained from Morningstar as of 8/28/26.
3 The world’s No. 1 golfer just ended his agonizing season with a $10 million payday
4 Corporate America’s Profits Are Booming—and Signal More Good Times Ahead
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