AE Wealth Management: Weekly Market Insights | 8/23/26 – 8/29/26

Weekly Market Commentary

THE WEEK IN REVIEW: Aug. 23-29, 2026

Markets are going to market

After hitting new records, the markets have been moving sideways to slightly downward for the past few sessions. And it’s not one single thing that’s holding us back, but rather a variety.

On the plus side, second-quarter earnings have been stellar. NVIDIA, in particular, blew the doors off estimates last week.¹ The rally had broadened out with small caps enjoying a resurgence while inflation, although elevated, isn’t getting worse. These are the things we need to focus on.

Sure, there are plenty of things to be concerned about, and it’s tempting to focus too much on the challenges rather than the great year the markets are having. It’s also easy to get lost in the daily noise. For example, the Iranian conflict continues without an end in sight. We are redoubling our economic sanctions and enforcing a blockade against Iran, while Iran says it has reached a deal with Oman for sharing revenues from the ship traffic through the Strait of Hormuz.² That doesn’t sound like we’re anywhere near a solution — and if we don’t find a permanent solution, there’s always the reality that oil traffic will be disrupted by a hostile Iran.

The second reading of second-quarter gross domestic product (GDP) remained unchanged at an increase of 1.5%, so the economy isn’t really growing at all.³ Then President Trump slapped new tariffs on Canada, which responded by raising duties on steel and adding $20 billion in tariffs of their own.⁴

Finally, there’s the bond market and the increasingly less transparent Federal Reserve. When the national debt hit $40 trillion recently, the U.S. Treasury intervened in the markets to lower yields.⁵ It bought back bonds it had issued, at least doubling its buyback operations for 10- to 30-year maturities. The yields declined for a day and then went higher.⁶

The U.S. Treasury financed this purchase by issuing short-term Treasuries. The markets went along for a day before bond investors (who happen to buy U.S. Treasuries) decided they don’t want to be paid 4.5% or 4.6% to own 10-year Treasuries because the U.S. government runs large budget deficits and isn’t doing or even planning to do something about them. In fact, deficits may actually go up (not decline) over the next 10 years. Budget deficits mean inflation, so the bond market said, “No thanks.”

We’re currently spending 15% of our budget on interest payments, which is more than we spend on defense (13%).⁷ Rather than make adjustments, we continue to borrow, live beyond our means and hope to repay with cheaper dollars in the future thanks to inflation.

For some reason, Treasury Secretary Scott Bessent feels there is a disconnect between where rates are and where they should be (in his view, they should be lower).⁸ That’s not what the Fed is saying; if anything, the Fed feels inflation is still too high and rates may need to be higher. Newsflash: No amount of gaslighting changes the fact that we are $40 trillion in the hole and are running a $2 trillion annual deficit.

But back to the bond market, which is doing just fine and knows exactly what it’s doing.⁹ That doesn’t bode well for confidence in the U.S. dollar. Very predictably, gold and other hard assets rallied and the dollar retreated while yields returned to pre-intervention levels.

So we say all that to say this: Things are not all doom and gloom. In reality, there’s a lot to be excited about. We have all types of structural headwinds and geopolitical turmoil, yet the stock market is at or near all-time highs. Earnings have been great, plus innovations and new-and-better ways of doing things abound.

We need to focus on the longer term for perspective, reassurance and clarity. Over time, the markets and a well-structured plan should endure any and all of the above obstacles. We will admit that some of our recent notes have been less optimistic, but we haven’t turned bearish. We still believe in the long-term viability of the markets, now and for the future. So far, it’s been a great year for markets and investors who stayed disciplined and are following their plan.

Coming this week

• This week will be all about jobs. On Tuesday, we’ll get the Job Openings and Labor Turnover Summary (JOLTS) report for July. As you may recall, job growth was slowing in July, so we could see a decline from the 7.4 million openings we saw in June.¹⁰
• Wednesday will feature the ADP national employment report for August. Last month it was at an increase of 44,000 jobs; expectations are for last month’s figure to remain in line and muted at an increase of 45,000 jobs.^11,12 We’ll also get factory orders, the Fed Beige Book and MBA mortgage applications on Wednesday.
• On Thursday, we’ll see weekly unemployment claims plus comments from Chicago Fed President Austan Goolsbee.
• Finally, Friday will bring the Bureau of Labor Statistics (BLS) employment situation (aka non-farm payrolls). Last month showed a negative reading (decrease of 23,000), even though the unemployment rate dipped slightly to 4.1%.¹³ Consensus is calling for the unemployment rate to remain the same, with jobs rebounding upward. We will also get hourly earnings to see if wages are keeping up with inflation.
• Second-quarter earnings are about done, with 97% of S&P 500 companies reporting results.¹⁴ As of Aug. 28, 86% of the companies reported positive earnings per share (EPS) and 77% reported positive revenue. Earnings growth for Q2 for the S&P 500 is 52% (up from 27.7% last quarter). If that number holds, it will mark the highest earnings growth for the index since Q2 2021. It’s been an outstanding quarter for earnings!
• For the current quarter, 35 S&P 500 companies have issued negative EPS guidance, while 63 have issued positive. Valuations are near historical averages for the S&P 500, with the forward 12-month price-to-earnings (P/E) ratio at 19.6 vs. 21.4 last quarter. This P/E ratio is slightly below the 5-year average (19.9) and slightly higher than the 10-year average (19.0). Earnings have been stellar, which explains much of why the market has been on such a roll despite some obvious areas of concern.

Sources:

¹ NVIDIA. Aug. 26, 2026. “NVIDIA Announces Financial Results for Second Quarter Fiscal 2027.” https://nvidianews.nvidia.com/news/nvidia-announces-financial-results-for-second-quarter-fiscal-2027. Accessed Aug. 29, 2026.

² Spencer Kimball and Justina Lee. CNBC. Aug. 25, 2026. “Oil prices little changed after Iran says deal reached with Oman to share revenue from Hormuz.” https://www.cnbc.com/2026/08/26/oil-falls-as-the-us-pivots-to-economic-pressure-on-iran-.html. Accessed Aug. 29, 2026.

³ Bureau of Economic Analysis. Aug. 26, 2026. “GDP (Second Estimate) and Corporate Profits, 2nd Quarter 2026.” https://www.bea.gov/news/2026/gdp-second-estimate-and-corporate-profits-2nd-quarter-2026. Accessed Aug. 29, 2026.

⁴ Steve Kopack. NBC News. Aug. 25, 2026. “Canada retaliates against U.S. by raising steel duties, adding new tariffs on $20B of goods.” https://www.nbcnews.com/business/consumer/canada-retaliates-against-trump-tariffs-rcna594280. Accessed Aug. 29, 2026.

⁵ Jeff Cox. CNBC. Aug. 19, 2026. “U.S. government debt passes $40 trillion, more than doubling in a decade.” https://www.cnbc.com/2026/08/19/us-government-debt-passes-40-trillion-mark-for-the-first-time.html. Accessed Aug. 29, 2026.

⁶ Fidelity. “Fixed Income & Bond Yields.” https://fixedincome.fidelity.com/ftgw/fi/FIYieldTable?popupMode=Y&yldTabSelected=H. Accessed Aug. 29, 2026.

⁷ Fiscal Data. “How much has the U.S. government spent this year?” https://fiscaldata.treasury.gov/americas-finance-guide/federal-spending/. Accessed Aug. 29, 2026.

⁸ Matt Egan. CNN. Aug. 27, 2026. “Kevin Warsh has a plan for the Fed. Scott Bessent is getting in the way.” https://www.cnn.com/2026/08/27/business/market-bonds-fed-bessent-warsh. Accessed Aug. 29, 2026.

⁹ Jeff Cox, Sean Conlon and Hugh Leask. CNBC. Aug. 20, 2026. “Treasury yields rebound, wiping out the decline following Bessent’s intervention.” https://www.cnbc.com/2026/08/20/bond-yields-edge-higher-as-traders-digest-treasury-debt-buyback-plan.html. Accessed Aug. 29, 2026.

¹⁰ U.S. Bureau of Labor Statistics. Aug. 4, 2026. “Job Openings and Labor Turnover Summary.” https://www.bls.gov/news.release/jolts.nr0.htm. Accessed Aug. 29, 2026.

¹¹ ADP Research. July 2026. “ADP® National Employment Report.” https://adpemploymentreport.com/. Accessed Aug. 29, 2026.

¹² MarketWatch. “U.S. Economic Calendar.” https://www.marketwatch.com/economy-politics/calendar. Accessed Aug. 29, 2026.

¹³ U.S. Bureau of Labor Statistics. Aug. 7, 2026. “Employment Situation Summary.” https://www.bls.gov/news.release/empsit.nr0.htm. Accessed Aug. 29, 2026.

¹⁴ John Butters. FactSet. Aug. 28, 2026. “Earnings Insight.” https://advantage.factset.com/hubfs/Website/Resources%20Section/Research%20Desk/Earnings%20Insight/EarningsInsight_082826.pdf. Accessed Aug. 29, 2026.

AE Wealth Management, LLC (AEWM) is an SEC Registered Investment Adviser (RIA) located in Topeka, Kansas. Registration does not denote any level of skill or qualification. The advisory firm providing you this report is an independent financial services firm and is not an affiliate company of AE Wealth Management, LLC. AEWM works with a variety of independent advisors. Some of the advisors are Investment Adviser Representatives (IAR) who provide investment advisory services through AEWM. Some of the advisors are Registered Investment Advisers providing investment advisory services that incorporate some of the products available through AEWM.

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The information and opinions contained herein, provided by third parties, have been obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed by AE Wealth Management.

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