WEEKLY MARKET RECAP – August 28, 2026

The S&P 500, NASDAQ, and Dow posted modest weekly gains, recovering some ground after the previous week’s declines. Stocks remained within a relatively narrow trading range for a third consecutive week following the four-day rally that began on July 30.

U.S. equities fluctuated on Friday after Federal Reserve Chair Kevin Warsh highlighted persistent inflation risks during his speech at the Jackson Hole economic symposium. With inflation still running well above the Fed’s 2% target, Warsh stressed that policymakers “must be confident that underlying inflation is moving to our objective, clearly and at sufficient speed. Otherwise, we have work to do.”

The bond market’s response to Warsh’s remarks was most noticeable at the shorter end of the yield curve. The 2-year Treasury yield climbed to 4.35% on Friday afternoon, up from 4.23% at Thursday’s close. Futures markets also reflected increased expectations that the Fed could raise interest rates at its meeting concluding September 16.

The Federal Reserve’s preferred inflation measure showed that price pressures increased modestly in July. The Personal Consumption Expenditures (PCE) Price Index rose 0.2% from the previous month, bringing the annual inflation rate to 3.7%. Both readings came in slightly above economists’ consensus forecasts.

Market volatility remained subdued despite renewed concerns about monetary policy. The Cboe Volatility Index fell as low as 14.1 during Friday morning trading, marking its lowest intraday level of the year, before closing at 14.4. That was well below the recent high of 20.9 reached on July 29.

While large-cap stocks managed modest gains for the week, small-cap companies came under greater pressure following Warsh’s speech. His comments fueled expectations for a potential interest rate increase, contributing to a 1.4% decline in the Russell 2000 on Friday.

Consumer sentiment also weakened as concerns about inflation persisted. The University of Michigan’s Index of Consumer Sentiment fell to 51.7 in August from 55.2 in July. Despite the decline, sentiment remained above the record low of 44.8 reached three months earlier.

Looking ahead, investors will focus on Friday’s monthly employment report for signs of whether the recent deterioration in the labor market continued into August. The July report showed a loss of 23,000 jobs, while estimates for May and June were revised sharply lower. Including those revisions, average job growth over the past three months fell to just 20,000 per month, a significant slowdown from March, when the economy added 214,000 jobs.