Market View: Week of Sep. 4, 2026
ECONOMIC REVIEW¹
The Institute for Supply Management (ISM) Manufacturing Purchasing Managers’ Index (PMI) eased to 54.6 in August, from July’s nearly four-year high of 55.6, but remained firmly above 50 in expansion territory for the eighth consecutive month. New orders slowed to 53.7, and employment eased to 51.2, while production remained strong at 58.3; prices stayed elevated at 71.1, and supplier deliveries rose to 59.3.
ISM Services PMI rose to 55.4 in August from 54.1 in July, beating expectations of 54.3 and marking the strongest pace of services sector growth in six months. Business activity (61.7) and new orders (60.9) hit multi-year highs, employment remained in contraction at 47.8, and prices rose to a four-year high of 72.6 amid higher fuel costs, tariffs, and Middle East disruptions.
U.S. job openings edged higher to 7.27 million in July from a downwardly revised 7.18 million in June, slightly below expectations of 7.30 million. There are roughly 1.1 jobs open per unemployed worker. The number of job quits came in at 3.1 million (1.9% rate), and layoffs at 1.7 million (1.0% rate).
The Federal Reserve’s (Fed) Beige Book showed economic activity increased modestly, led by data center and defense demand that supported manufacturing, while employment rose slightly and price pressures accelerated moderately across different Fed districts.
Nonfarm payrolls surged by 162,000 in August, well above expectations of 56,000 and the prior 12-month average of 31,000 jobs. June and July were revised higher by a combined 55,000, including July, from -23,000 to +21,000.
The unemployment rate held at 4.1%, while labor force participation edged up to 61.6%. Average hourly earnings rose 0.3% for the month and 3.1% year over year.
How does the most recent economic data impact you?
Economic growth remains on solid footing, while the labor market looks considerably stronger than the earlier reports suggested. The latest data points to a reacceleration in hiring and suggests the recent weakness was more of a soft patch than the beginning of a meaningful deterioration.
The stronger labor backdrop removes one of the clearest arguments for lower interest rates and reinforces Fed Chair Warsh’s view that the labor market remains near full employment. With employment holding up, the Fed has greater flexibility to remain focused on bringing inflation back toward target rather than providing additional support to the economy.
A LOOK FORWARD¹
Despite the holiday-shortened week, the economic calendar is jam-packed, headlined by August’s Producer Price Index (PPI) and Consumer Price Index (CPI) alongside existing home sales and preliminary consumer sentiment.
How does this week’s slate of economic data impact you?
The Fed's job just became more difficult with renewed labor market strength, putting inflation squarely back in focus. Persistent price pressures remain one of the biggest risks to both monetary policy and the broader market outlook.
Consumer sentiment will test the disconnect between resilient markets and households still facing elevated prices, with continued weakness raising questions about the durability of consumer spending.
MARKET UPDATE²
| Market Index Returns as of 9/4/26 | WTD | QTD | YTD | 1 YR | 3 YR | 5 YR |
|---|---|---|---|---|---|---|
| S&P 500 | 0.13% | 3.13% | 13.65% | 20.48% | 21.32% | 12.83% |
| NASDAQ | 0.42% | 1.21% | 14.51% | 22.88% | 24.48% | 12.34% |
| Dow Jones Industrial Average | -0.16% | 2.40% | 12.39% | 19.57% | 17.59% | 10.67% |
| Russell Mid-Cap | -0.38% | 1.35% | 16.86% | 17.71% | 17.21% | 7.93% |
| Russell 2000 (Small Cap) | 0.15% | -1.42% | 20.83% | 25.98% | 18.12% | 6.82% |
| MSCI EAFE (International) | -0.16% | 4.24% | 14.08% | 21.61% | 18.76% | 9.09% |
| MSCI Emerging Markets | 0.26% | 0.62% | 24.61% | 37.88% | 23.17% | 8.15% |
| Bloomberg U.S. Agg Bond | -0.18% | -1.01% | -0.40% | 0.87% | 4.39% | -0.29% |
| Bloomberg High Yield Corp. | -0.15% | 0.60% | 2.57% | 4.42% | 8.57% | 4.07% |
| Bloomberg Global Agg | 0.06% | 0.09% | -0.13% | 0.19% | 4.14% | -1.76% |
OBSERVATIONS
Major domestic indices were mixed, with technology leading while the Dow moved modestly lower. The NASDAQ (+0.42%) led gains, followed by the S&P 500 (0.13%), while the Dow Jones Industrial Average declined -0.16%.
Down-cap equities were also mixed. The Russell Mid-Cap declined -0.38% while the Russell 2000 gained +0.15%.
International equities diverged as well, with developed markets (MSCI EAFE) declining -0.16%, while emerging markets advanced +0.26%.
Domestic fixed income markets moved modestly lower, with the Bloomberg U.S. Aggregate declining -0.18% and high yield bonds falling -0.15%. International bonds bucked the trend, with the Bloomberg Global Aggregate gaining +0.06%.
BY THE NUMBERS
The Panama Canal: Less Water, Less Trade:
El Niño is suppressing rainfall in Panama, creating a severe water shortage for the 50-mile canal, where fresh water is essential to operate the locks that lift and lower ships between the Atlantic and Pacific. With rainfall roughly 35% below the historical average from May through August, and each transit requiring roughly 200 million liters of water, the canal is cutting daily traffic from 36 to 32 ships. Maximum vessel draft is also being reduced from 15.24 to 14.63 meters, with ships losing roughly 200 containers of capacity for every 30cm reduction. The stakes are significant, as about 5% of global trade passes through the canal, and roughly 70% of its container traffic originates from or is destined for the United States. With drought conditions potentially lasting into mid-2027, further restrictions could mean fewer ships, smaller cargo loads, longer wait times, and higher shipping costs.³
264 Days without a Day Off:
The USS Abraham Lincoln finally made port in Thailand after spending 264 consecutive days at sea, giving its roughly 5,000 sailors and Marines their first full port stop since deploying in November. The nuclear-powered carrier has been deployed for 286 total days, including an extended combat deployment supporting U.S. operations against Iran. At roughly 3 football fields long, the Lincoln arrived visibly worn from the deployment, while reports also surfaced of food shortages and deteriorating mental health among the crew. The stop is also a sizable economic event for Pattaya, where officials expect the influx of service members to generate roughly 100 million baht, or $3,000,000 for the local economy.⁴
Disclosures
The statements provided herein are based solely on the opinions of the Osaic Research Team and are being provided for general information purposes only. Neither the information nor any opinion expressed constitutes an offer or a solicitation to buy or sell any securities or other financial instruments. Any opinions provided herein should not be relied upon for investment decisions and may differ from those of other departments or divisions of Osaic Wealth, Inc. (“Osaic”) or its affiliates.
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1 Data obtained from Bloomberg as of 9/4/26.
2 Data obtained from Morningstar as of 9/4/26.
3 The Panama Canal: Less Water, Less Trade | www.france24.com
4 264 Days Without a Day Off | apnews.com
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