Commentary for September, 2026

Hello all - we hope your September was a nice one.

September was a sloppy month for stocks.  They finished not far from where they started, but a lot was going on under the hood.  The Dow was down 4.3%, the S&P lost 0.4%, and the Nasdaq, which has a higher concentration of tech stocks, rose 2.2%.  

We also closed out the third quarter, where the Dow lost 2.7%, the S&P gained 2.0%, and the Nasdaq rose 2.5%.  

 

Here’s a look at how the markets moved this month:

 

Here’s a look at how the various market sectors performed this month. 

 

Here’s a look at all the performance of all the stocks in the S&P 500 for the past month.

 

Notice in the charts above how many stocks and sectors were negative this month?  Many, many stocks are trading lower, but the ultra-strong tech sector makes up a large percentage of the market and has been keeping the markets higher. 

If every stock in the index had the same weighting – unlike now where tech has a higher weighting – the market would be dropping sharply (the blue line in the chart below).

 

That’s called the market “breadth,” which measures how many stocks are moving higher (or lower).  By some metrics, it’s the worst “breadth” since the dot-com bust.

 

All that said, stocks were a little more volatile for the month, but still at a relatively low level.

 

____

BONDS

Bonds were the big story this month.

The yields on bonds reached either all-time highs or multi-decade highs again this month, which means it’s more expensive to borrow money - like having a higher credit card or mortgage rate.

 

When bond yields rise, their prices drop.  So in your investment portfolios, you will notice that your bond holdings likely saw losses in September.  Here’s a look at the price of the Vanguard Total Bond Index, a popular bond fund.

 

There’re several things contributing to the rise in bond yields. Very high government debt levels, high inflation, and AI-related companies taking on more debt to build out infrastructure.  

This AI infrastructure is a very interesting story.  These tech companies are taking out a lot of debt to finance the construction of the infrastructure, but few realize just how big the spending actually is.  In the chart below, you can see the spending levels are GREATER than other great infrastructure periods in the U.S. 

 

____

FED

Looking again at bond yields, the level of bond yields (specifically the 2-year bond yield) is a good indicator of what the Fed will do with their rate levels.

The chart below shows when the Fed rate is BELOW the 2-year bond yield, the stock markets often rise because it’s seen as stimulative.  Then the Fed raises its rates as a result to keep the economy from getting overheated (they think this leads to higher inflation, but we disagree – it’s a conversation for another time). 

 

The Fed, indeed, did start its rate-raising cycle this month with the first rate hike since 2024.

 

The odds of another rate hike at their next meeting in October had been fairly high, but has fallen recently.

 

 

The style of the new Fed chief, Kevin Warsh, continues to be a topic of conversation.  He doesn’t talk much, not wanting the Fed to influence markets.  This has been a complaint of ours for the last, well, couple of decades.  The Fed would use its power to “jawbone” the markets to do what they wanted it to.  We are moving away from that, and that is a good thing.  

 

____

OIL

Oil prices and the Iran war remain an important factor for the markets.  Oil prices popped higher this month, though they closed not far from where the month started.  

 

The amount of oil around the globe is dropping to the lowest levels in years.

 

This remains a factor - maybe the factor - in higher inflation levels.

____

INFLATION

Inflation numbers released this month showed a new rise in prices.  

 

The monthly inflation number showed another strong rise. 

 

This measurement is for August, which was the first month in the last three to see a rise in gas prices.   

 

These higher gas (and diesel) prices are raising transportation costs, which feeds into everything we buy.

Shipping costs by sea have seen a sharp increase (some of this is due to the waters around Iran, too).

 

Trucking rates are rising quickly, as well.

 

Other basics like food continues to climb, with meat prices again at record highs.

 

When excluding food and energy (what economists call the “core” inflation), prices showed another rise.

 

Here’s a look at the inflation level for businesses, which saw a new rise.

 

____

OTHER ECONOMIC DATA

Other economic data releases were mixed this month, but leaned more to the positive side.

Employment finally took a turn higher.

Both the manufacturing and service parts of our economy are expanding, though manufacturing was a tad weaker than last month.  

 

Retail sales showed a decent increase.

 

 

While durable goods were dead flat from last month.    

 

The survey data was pretty bad this month. Consumer confidence keeps moving lower.

 

Small businesses were a little less optimistic, too.

 

____

Where does the market go from here? 

It’s tough to get a good feel for the markets here.  In the very short term - like a week or two - the odds look better for a rise.  But looking out a little longer is a little tougher to tell as no real trend is in the market.  Corporate earnings are good and the economy seems fairly decent, but random geopolitical events like Iran can have a quick impact on the markets.

One issue we talked about earlier in this commentary is the poor “breadth” of the market.  True, fewer and fewer stocks are participating in the rise.  However, you can see in the chart below that 20-day average – the shortest time period we look at – is showing an INCREASE in breadth.  That’s a good sign and continued improvement suggests a rise in the markets is more likely.   

 

This commentary is for informational purposes and is not investment advice, an indicator of future performance, a solicitation, an offer to buy or sell, or a recommendation for any security. It should not be used as a primary basis for making investment decisions. Consider your own financial circumstances and goals carefully before investing. Past performance cannot guarantee results.

Commentary for August, 2026

Hello all - we hope you had a nice August.

Stocks saw a slight rebound this month.  The Dow was up 1.3%, the S&P gained 2.6%, and the Nasdaq, which has a higher concentration of tech stocks, rose 3.9%. 

 

 

Here’s a look at how the markets moved this month:

 

Here’s a look at how the various market sectors performed this month. 

 

Stocks were much less volatile this month, too.

 

Checking in with oil, where prices are still high, but not as high as they were at the height of the Iran war.

 

____

BONDS

Bonds grabbed most of the headlines this month.

The yields on bonds reached either all-time highs or multi-year highs this month, which means it’s more expensive to borrow money - like having a higher credit card or mortgage rate.  A few things contributed to the yield rise, like very high government debt levels, high inflation, and AI-related companies taking on more debt to build out infrastructure.  

 

These high yields became such a story that Treasury Secretary Bessent made a surprise announcement that the Treasury Department would be taking steps to bring those yields down.  

They will be raising money by selling more shorter-term bonds, which have lower rates, and using that money to buy these bonds with higher rates.  

This action is a form of “financial engineering,” where they try to manipulate a market.  It’s not uncommon and it may work, but it also tends to weaken a currency.  In fact, investments that do well when a currency weakens, gold and bitcoin, both saw sharp gains on the news.  

 

____

FED

Speaking of higher rates, the Fed was in the news this month with their annual “Economic Symposium” in Jackson Hole.

New Fed chief Warsh gave a speech where he talked tough on inflation, citing the need to bring inflation down.  The Fed often raises interest rates when inflation is high to cool the economy and reduce inflation, so it led to many investors believing the Fed will raise rates soon.  

 

To us, we think it is highly unlikely he will raise rates.

For one thing, it will do nothing to help inflation.  The inflation right now is due to the Iran war and high energy prices.  Raising rates will do nothing to solve that problem.  

For another, it will raise borrowing costs.  As we discussed above, another branch of the government is trying to bring rates down, and this won’t help that.  

Finally, we just think there is no way he does, which is how he got this job.  

We think the Fed might talk tough on raising rates but never will, and this eventual realization by investors will help stocks go higher.  

____

INFLATION

Inflation numbers released this month showed another drop in prices.  

 

The monthly inflation number did show a slight increase, though. 

 

This CPI still saw oil prices lower on the month which is fighting in Iran re-intensified, so we may see a higher inflation print next month as a result.  

This chart shows gas prices lower in the previous month:   

 

Other basics like food continues to climb, with meat prices at record highs, for example.

 

When excluding food and energy (what economists call the “core” inflation), prices showed another rise.

 

Here’s a look at the inflation level for businesses, which remained slightly negative. 

 

____

OTHER ECONOMIC DATA

Other economic data releases were mixed this month.

Employment continues to trend lower and resulted in a net loss of jobs last month.

 

Both the manufacturing and service parts of our economy are expanding, while manufacturing looks very strong.  

 

Retail sales showed a slight decline.

 

 

While durable goods showed a slight increase.  

 

Consumer confidence continues to trend lower.

 

Finally, small businesses saw a nice increase in optimism.

 

____

Where does the market go from here? 

Stocks reached a very oversold level this month and had a nice rebound off those levels.  The month-end saw some weakness, but there may be room to run higher.  

There is a concern that there is underlying weakness in the market, though.  Fewer and fewer stocks are above their recent averages, which is usually a red flag and something to keep an eye on.  

 

This commentary is for informational purposes and is not investment advice, an indicator of future performance, a solicitation, an offer to buy or sell, or a recommendation for any security. It should not be used as a primary basis for making investment decisions. Consider your own financial circumstances and goals carefully before investing. Past performance cannot guarantee results.