Weekly Market Roundup
Equities notched modest gains for the week even as Friday's session pulled back after Fed Chair Kevin Warsh's Jackson Hole speech struck a more hawkish tone than expected. Warsh argued that inflation remains too high, citing a 12-month PCE reading of 3.7% against the Fed's 2% target, and explicitly declined to offer forward guidance on the path of rates, favoring what he called "a discipline, not a decision." Markets quickly repriced the odds of a September rate hike higher, to roughly 52% from around 30% before the speech. The S&P 500 finished the week up +0.50%, the Nasdaq added +0.85%, and the Dow Jones rose +0.19%, though small caps lagged notably, with the Russell 2000 down -1.49% as the more rate-sensitive corner of the market bore the brunt of the hawkish surprise.
The week's other major catalyst was Nvidia's earnings report, which beat expectations decisively: management guided to roughly 70% revenue growth for the coming fiscal year, well above consensus estimates near 45%, sending the stock sharply higher and pushing its market capitalization to roughly $5.5 trillion. Elsewhere, retail earnings were more uneven; a profit warning from Dick's Sporting Goods over excess sneaker inventory weighed on the athletic wear group broadly, with Nike, Under Armour, and On Running all trading lower on the news.
Treasury yields jumped intraday following Warsh's remarks before paring some of the move, and gold and silver each saw sharp pullbacks (roughly -3% and -6% intraday, respectively) as the hawkish tone reduced expectations for near-term rate relief. Even so, the 2-year, 10-year, and 30-year Treasury yields all ended the month modestly lower than where they started. International equities were roughly flat on the week (+0.01%) but remain one of the stronger performers year-to-date, up +17.8%. The VIX closed the week at 14.43, a contained level that suggests markets are not yet pricing in meaningful stress despite the more hawkish Fed tone.
This week's calendar is dominated by labor market data, culminating in Friday's August jobs report. ISM Manufacturing and JOLTS job openings on Tuesday kick off the week, followed by ISM Services on Thursday. Friday's nonfarm payrolls report, along with the unemployment rate and average hourly earnings, will be the most closely watched release, particularly given the shift in rate expectations following Chair Warsh's hawkish Jackson Hole remarks. A stronger-than-expected print could reinforce the case for a September hike, while a softer one would likely temper it.
This week was a reminder that the market's tone can shift quickly on a single speech. Chair Warsh's Jackson Hole remarks were more hawkish than many expected, and the market's rapid repricing of rate-hike odds, more than doubling within a single session, shows how sensitive positioning still is to Fed communication, even as the chair himself pushed back on the idea that the Fed should offer more forward guidance, not less.
We would caution against reading too much into one speech or one week of price action. Friday's jobs report will be a more meaningful test of whether the labor market genuinely justifies a more hawkish stance, and we would rather let a broader run of data, rather than any single data point, guide our thinking on rates from here.
Nvidia's results were a useful reminder that fundamentals, not just macro headlines, still matter, and that strong execution continues to be rewarded even in a more uncertain rate environment. We remain diversified across market capitalizations, sectors, and geographies, and we believe that positioning leaves us well prepared for whatever September's data brings.
If you have any questions about the above, please reach out to us to set up a one-to-one meeting so we can review your situation.
Sincerely,
President
SBC Investment Management
P: (602) 641-5996 · M: (319) 520-2033 · E: bandrus@sbcinvestmentmanagement.com
Investment Analyst, Junior Portfolio Manager
SBC Investment Management
P: (435) 775-2950 · M: (435) 590-8317 · E: jrehkop@sbcinvestmentmanagement.com