AE Wealth Management: Weekly Market Insights | 9/13/26-9/19/26

Weekly Market Commentary

THE WEEK IN REVIEW: Sept. 13-19, 2026

The Fed hikes

Well, they did it. On Wednesday, the Federal Reserve raised its target for short-term interest rates by a quarter point to a range of 3.75%-4.00%.¹ It’s the first hike since July 2023, and the vote was unanimous.

Fed Chair Kevin Warsh’s post-meeting comments basically told us what we already know: Domestic spending has been resilient, and the increase will support a “timelier return” to the Fed’s 2% inflation target.² The translation? The Fed is done waiting.

Warsh leaned hard on price stability, describing the move as removing “a dose of accommodation.” Asked whether the Fed can do anything about oil prices, he was direct in saying the Fed can’t move any single price, but it can keep a change in relative prices from broadening out into everything else.³

Markets didn’t love his comments in the moment. Stocks slid during Warsh’s remarks, and the Dow closed Wednesday down more than 600 points before recovering most of what it lost on Thursday.⁴

Before the war with Iran, the Fed was making steady progress against inflation. Almost all of the increase since then traces back to the rising price of energy. August CPI came in at 3.4% over the prior 12 months, with gasoline up 27.4% from a year ago and accounting for more than a third of the monthly rise in the headline number. Strip out food and energy, though, and core inflation actually eased to 2.4% — the slowest reading of this cycle.⁵

The Fed’s own playbook says that when inflation rises temporarily because of a negative supply shock, the right move is to hold policy steady until the shock runs its course. Raising short-term rates doesn’t produce a single additional barrel of oil.

So why hike now? Because the Fed is worried about what comes next and the second- and third-order effects that turn an “energy” problem into an “everything” problem. It’s up for debate whether that risk justifies moving now, and it’s a debate we suspect will go on for a while.

Two economies, one policy rate

Part of what makes the Fed’s job so awkward right now is that the U.S. economy is running at two speeds. Technology is robust and relatively insulated from what the Fed does with short-term rates. On the flip side, housing is soft due to its rate sensitivity. One policy rate has to serve both.

Investors also got a reminder last week that “technology” isn’t one thing. On Monday, a group of AI executives publicly called for slowing the pace of frontier model development on safety grounds.⁶ Investors did the math on what a slower buildout would mean for chip demand and hit the sell button. At the same time, money rotated into cybersecurity and software names on the theory that more capable AI agents mean more spending on controls and monitoring.⁷

Coming this week

• This week is a light one for data. A couple of Fed members will be on the speaking circuit this week and could shed light on whether or not another hike is possible in 2026.
• Data starts on Wednesday with the U.S. Flash Manufacturing PMI and Flash Services PMI.
• Thursday will feature the usual weekly jobless claims as well as new home sales. Mortgage rates are back over 7%, but it will take a bit for that to be reflected in the sales numbers.
• We’ll end the week with durable goods and the University of Michigan consumer survey.

Sources:

¹ Jeff Cox. CNBC. Sept. 16, 2026. “Fed approves interest rate hike, signals one more to come this year.” https://www.cnbc.com/2026/09/16/fed-rate-decision-september-2026.html. Accessed Sept. 20, 2026.

² Jeff Cox. CNBC. Sept. 18, 2026. “Three words from Kevin Warsh have Wall Street wondering how far the Fed will go with rate hikes.” https://www.cnbc.com/2026/09/18/three-words-from-kevin-warsh-have-wall-street-wondering-how-far-the-fed-will-go-with-rate-hikes.html. Accessed Sept. 20, 2026.

³ Jeffry Bartash. Morningstar. Sept. 19, 2026. “Warsh’s Fed shows it’s serious about taming inflation. Why Wall Street now believes it.” https://www.morningstar.com/news/marketwatch/20260919109/warshs-fed-shows-its-serious-about-taming-inflation-why-wall-street-now-believes-it. Accessed Sept. 20, 2026.

⁴ Yahoo! Finance. “Dow Jones Industrial Average (ˆDJI).” https://finance.yahoo.com/quote/%5EDJI/. Accessed Sept. 20, 2026.

⁵ U.S. Bureau of Labor Statistics. Sept. 11, 2026. “Consumer Price Index Summary.” https://www.bls.gov/news.release/cpi.nr0.htm. Accessed Sept. 20, 2026.

⁶ Christine Ji. Morningstar. Sept. 19, 2026. “AI leaders want to ‘pace the frontier’ as part of a safety slowdown. But how?” https://www.morningstar.com/news/marketwatch/20260919102/ai-leaders-want-to-pace-the-frontier-as-part-of-a-safety-slowdown-but-how. Accessed Sept. 20, 2026.

⁷ Samantha Subin and Arjun Kharpal. CNBC. Sept. 14, 2026. “AI stocks sink while cybersecurity shares rally on slowdown fears.” https://www.cnbc.com/2026/09/14/ai-stocks-slowdown-amodei-altman.html. Accessed Sept. 20, 2026.

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