Weekly Market Review | August 31 – September 4, 2026

The coming trading week could be one of the more important weeks in recent months, as investor attention shifts away from mega-cap earnings and back toward employment, interest rates and the bond market. Following a relatively hawkish Jackson Hole speech from Fed Chair Kevin Warsh, markets are once again seriously pricing the possibility of another rate increase in September. Almost every economic release this week will therefore be viewed through one question: is the U.S. economy strong enough for the Federal Reserve to continue fighting inflation with higher interest rates?

Wall Street finished last week with modest gains. The S&P 500 gained roughly 0.5%, the Nasdaq about 0.8% and the Dow around 0.5%, while the Russell 2000 fell approximately 1.5%. That divergence matters. The major indexes continue to receive strong support from mega-cap and technology stocks, while underlying market breadth has been less convincing. On Friday, the picture weakened following Warsh's speech, with the S&P 500 falling 0.25% and the Nasdaq losing 0.52%.

Interest rates were the primary reason for the pressure. Warsh made clear that the Fed is not yet convinced inflation is moving sufficiently toward its 2% target. Following his remarks, markets raised the probability of a September rate increase to around 57%. The two-year Treasury yield moved toward 4.36%, while the 10-year yield approached 4.7%. For equities, especially growth and technology stocks, the cost of capital is once again moving to center stage.

This Week Belongs to the Labor Market

The week's main event arrives Friday with the U.S. August employment report. After the surprising loss of 23,000 jobs in July, expectations call for only a modest rebound of roughly 50,000–60,000 jobs in August, with unemployment around 4.1%. This will be the final monthly employment report available to the Fed before its September 16 rate decision.

But the path toward Friday will be packed with information. Tuesday brings July JOLTS job openings and the ISM manufacturing survey. Wednesday brings ADP private-sector employment, while Thursday includes ISM services together with productivity and labor-cost data. Markets will therefore receive a sequence of readings on the health of the U.S. economy before Friday's headline employment report.

The most favorable outcome for markets would probably be further cooling in employment without an outright collapse. Moderately soft employment data could reduce expectations for a rate hike, push bond yields lower and support technology and other risk assets. A significantly stronger report, especially accompanied by stronger wage growth, could push yields higher and pressure equity valuations. On the other hand, an extremely weak number could initially benefit bonds but reopen recession concerns. This time, bad economic news is therefore not automatically good news for stocks.

Technology – The AI Test Moves Beyond Nvidia

Nvidia delivered another powerful outlook last week, helping ease concerns about the sustainability of the AI investment cycle. Yet the stock fell 4.6% on Friday, illustrating that even outstanding corporate results may not be enough when bond markets begin pricing higher interest rates.

This week the test moves further down the AI infrastructure chain. Dell Technologies and Palo Alto Networks are scheduled to report Tuesday, with Broadcom and Hewlett Packard Enterprise reporting Wednesday. Broadcom will be particularly important because it has become an increasingly significant indicator of demand for custom AI chips and data-center networking infrastructure.

If these companies continue to show accelerating AI orders and capital spending, Nvidia's message will receive further confirmation. Weaker guidance, however, could cause investors to question whether current valuations already reflect too much future growth.

Bonds Remain the Critical Market

The bond market should remain the first place investors look this week. Long-term U.S. yields remain elevated because of the combination of inflation, large fiscal deficits, government debt above $40 trillion and heavy Treasury issuance. The 30-year yield recently reached roughly 5.33%, its highest level since 2007. At the same time, the Treasury Department has been increasing long-duration bond buybacks in an effort to improve market liquidity and reduce pressure on longer-term yields.

The conflict between these forces remains important. Washington would prefer to prevent financing costs from rising too far, while the Federal Reserve is signaling that it will not abandon its inflation fight. A renewed sharp rise in the 10-year yield could therefore become the biggest risk for equities even if corporate earnings remain strong.

Israel – A Major Bank of Israel Decision on Tuesday

In Israel, the week's most important event is the Bank of Israel interest-rate decision on Tuesday, September 1, at 4:00 p.m. The policy rate currently stands at 3.5%, following a 25-basis-point cut in July. Annual inflation is currently around 1.5%, near the lower part of the Bank's target range, while the representative dollar-shekel rate ended last week around 2.968.

That gives the Bank of Israel room to continue easing. Low inflation and a strong shekel support another rate reduction, although renewed upward pressure on global bond yields, energy prices and geopolitical uncertainty could encourage policymakers to remain more cautious.

Another rate cut would normally be supportive for Israeli bonds, real-estate companies and other leveraged sectors, while the impact on banks could be more mixed. A decision to leave rates unchanged could provide some support for the shekel but disappoint investors already expecting continued monetary easing.

The TA-35 finished Friday at 4,172 points, down 0.51% on the day but still almost 15% higher year to date. Israel's equity market is therefore also approaching the rate decision from relatively elevated levels, increasing its sensitivity to surprises.

Europe and China

Internationally, Monday brings China's August purchasing managers' surveys. Consensus expectations suggest the official manufacturing index will remain below the 50 level separating expansion from contraction, reflecting continuing weakness in domestic demand and the property sector.

On Tuesday, the euro area releases its preliminary August inflation estimate. Inflation stood at 2.9% in July, and market estimates point toward another increase into roughly the 3.2%–3.3% area. Such a result would reinforce expectations that the ECB may have to maintain or even tighten restrictive monetary policy.

The higher-rate story is therefore not limited to the United States. Europe, Japan and several other central banks are again confronting inflationary pressures, and a synchronized global rise in bond yields would be a more difficult environment for risk assets.

Oil, Gold and Bitcoin

Oil declined last week despite continued Middle East tensions. Brent settled Friday around $89.3 per barrel and fell more than 5% for the week, helped by hopes surrounding Strait of Hormuz shipping and the possibility of additional Venezuelan supply. Geopolitics nevertheless remains a major market risk. A renewed surge in oil would quickly raise inflation expectations and put pressure on both bonds and equities.

Gold suffered a sharp correction of more than 3% on Friday, falling toward $4,567 an ounce as the dollar and Treasury yields jumped. Silver declined toward $66.8. The move does not necessarily invalidate the longer-term precious-metals thesis, but it demonstrates how sensitive these markets remain to changes in interest-rate expectations.

Bitcoin also experienced significant volatility. It moved above $80,000 during the week as concerns about dollar debasement and Treasury intervention in the bond market boosted demand for alternative assets, before retreating below that level following Warsh's hawkish message. Treasury yields and the dollar may therefore matter almost as much as crypto-specific news during the coming week.

Bottom Line

Markets enter September in an interesting position. The longer-term equity trend remains constructive, corporate earnings remain strong and the AI investment cycle continues to provide fundamental support. At the same time, valuations are elevated, market breadth is less convincing and Treasury yields are once again moving higher.

This is therefore less a week about which individual stock will outperform and more a week about interest rates, bond yields and employment.

The most important variable to watch, in my view, will be the U.S. 10-year Treasury yield. Falling yields combined with moderately softer employment data could reopen the door for another leg higher, particularly in technology. Strong economic numbers that push yields and the dollar higher, however, could force another repricing of growth stocks even if the underlying economy remains healthy.