Weekly Market Roundup
Markets sold off for much of the week as an escalating conflict in the Middle East sent oil prices surging and reignited inflation fears just as a hot producer-price report hit the tape. Over the long holiday weekend, intensified U.S.-Iran strikes in the Strait of Hormuz pushed Brent crude above $100 a barrel for the first time since 2022, and losses compounded Tuesday as Canada announced retaliatory tariffs on roughly $20 billion of U.S. goods. Equities extended their slide into Thursday's August PPI report, which showed producer prices up 5.4% year-over-year (from 4.8% in July) — hotter than expected and a clear signal that inflation pressure has not eased. By the time Friday's CPI print arrived in line with expectations at 3.4% year-over-year, the market treated it as a relief rather than a fresh scare, staging a "sell the news" rally that clawed back some of the week's losses. Even so, the S&P 500 finished the week down -0.78%, the Nasdaq fell -0.64%, the Dow dropped -1.59%, and the Russell 2000 lagged with a -2.38% decline as smaller, more rate-sensitive companies bore the brunt of the selling.
Treasury yields moved sharply higher on the week's inflation data, with the 10-year briefly touching its highest intraday level since October 2023 near 4.95% and the 2-year reaching a two-year high, before both eased modestly into Friday's close to end the week at 4.56% and 4.95%, respectively, with the 30-year at 5.37%. The Bloomberg US Aggregate fell -1.04% on the week and is now down -1.43% for the year. Market-implied odds of a Fed rate hike at this Wednesday's meeting rose sharply over the course of the week, and the VIX, while still within its recent "investable" range, closed at 15.83 as volatility conditions turned somewhat more fragile under the surface. Oil ultimately settled the week near $100 a barrel for WTI, still up roughly 8% for the week despite paring some of its intraweek advance.
Sector performance was narrow: only the Energy and Technology sectors posted gains on the week, while the equal-weight S&P 500 fell nearly -2%, reflecting how concentrated this week's strength really was. International equities also declined, with the MSCI ACWI Ex-USA index down -1.09% on the week, though it remains up +16.54% year-to-date.
This week is dominated by the Federal Reserve, which meets Tuesday and Wednesday and delivers its interest-rate decision along with a press conference Wednesday afternoon. Markets have moved decisively toward pricing in a hike following last week's hotter PPI print, even as Friday's in-line CPI offered some reassurance; the decision, and perhaps more importantly the Fed's forward guidance, will likely set the tone for markets into month-end. Ahead of that, Tuesday brings the ADP employment report, and Wednesday morning brings retail sales data. Thursday's calendar includes weekly jobless claims, housing starts, and the Philadelphia Fed manufacturing index, while Friday closes the week with industrial production and the Conference Board's leading economic index.
This was a week where geopolitics, inflation data, and Fed policy expectations all pulled in the same direction at once, and the market's reaction — selling off through Thursday before recovering on Friday's in-line CPI — illustrates just how sensitive positioning has become to each incremental data point. We would caution against reading too much into any single week of price action, particularly one so heavily influenced by an energy-driven geopolitical shock.
The Fed's decision this Wednesday is the most consequential event of the month, but we think the more important question is less about this single meeting and more about the path of policy from here. A backdrop of resilient growth alongside stickier inflation and rising energy costs argues for a cautious, quality-oriented posture, and we continue to favor larger-cap, higher-quality exposure over the more rate-sensitive and higher-beta corners of the market that this kind of environment tends to punish.
We remain diversified across market capitalizations, sectors, and geographies, and we do not intend to make reactive changes to portfolios based on any single week of oil-driven, headline-driven volatility. As always, we believe a disciplined approach, grounded in a broad view of the data rather than any one print or headline, is the best way to navigate weeks like this one.
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