Equities extended their advance on the back of historic earnings strength, with the S&P 500 up 2.6% in August as 2026 profit growth estimates of roughly 29% continued to outpace price gains and keep valuations in check.
Marking his 100th day as Fed Chair, Kevin Warsh used his Jackson Hole keynote to warn that sticky inflation could still push the Fed toward a hike, reaffirming the 2% target and putting him at odds with both Bessent and the White House on rates.
Inflation progress stalled, with headline CPI at 3.4% and the Fed’s preferred PCE gauge holding at 3.7%, both still well above target as renewed Middle East tensions pushed oil back into the mid-$80s and reversed the disinflationary tailwind from energy.
Long-end Treasury yields spiked to a twodecade high above 5.30% mid-month before settling back near 5.25%, as total US national debt crossed the $40 trillion milestone, raising fresh questions about debt service costs and long-run growth.
The labor market cooled further, with July payrolls falling 23,000 and combined downward revisions stripping 103,000 jobs from the prior two months, even as the unemployment rate ticked down to 4.1% on falling labor-force participation rather than hiring strength.
Looking ahead, September brings the Fed back into focus: the August jobs report (9/4) and CPI (9/11) will set the stage for the September 15–16 FOMC meeting, where a Summary of Economic Projections and updated dot plot are due alongside the rate decision.
Equity Market Overview
Earnings Momentum Continues to Support the Rally
Corporate profits have been a standout this year, and the strength goes a long way toward explaining equity market performance. S&P 500 earnings are on pace to grow roughly 29% in Long-end Treasury yields spiked to a twodecade high above 5.30% mid-month before settling back near 5.25%, as total US national debt crossed the $40 trillion milestone, raising fresh questions about debt service costs and long-run growth. The labor market cooled further, with July payrolls falling 23,000 and combined downward revisions stripping 103,000 jobs from the prior two months, even as the unemployment rate ticked down to 4.1% on falling labor-force participation rather than hiring strength. Looking ahead, September brings the Fed back into focus: the August jobs report (9/4) and CPI (9/11) will set the stage for the September 15–16 FOMC meeting, where a Summary of Economic Projections and updated dot plot are due alongside the rate decision. 2026, among the fastest paces of profit growth this far into an economic expansion outside of a post-recession rebound. Consensus estimates call for another 15% in earnings growth next year, underscoring that this isn’t viewed as a one-time bump but a durable trend.
September ISS
September ISS
Performance Review & Outlook
Highlights
Equity Market Overview
Earnings Momentum Continues to Support the Rally
Corporate profits have been a standout this year, and the strength goes a long way toward explaining equity market performance. S&P 500 earnings are on pace to grow roughly 29% in Long-end Treasury yields spiked to a twodecade high above 5.30% mid-month before settling back near 5.25%, as total US national debt crossed the $40 trillion milestone, raising fresh questions about debt service costs and long-run growth. The labor market cooled further, with July payrolls falling 23,000 and combined downward revisions stripping 103,000 jobs from the prior two months, even as the unemployment rate ticked down to 4.1% on falling labor-force participation rather than hiring strength. Looking ahead, September brings the Fed back into focus: the August jobs report (9/4) and CPI (9/11) will set the stage for the September 15–16 FOMC meeting, where a Summary of Economic Projections and updated dot plot are due alongside the rate decision. 2026, among the fastest paces of profit growth this far into an economic expansion outside of a post-recession rebound. Consensus estimates call for another 15% in earnings growth next year, underscoring that this isn’t viewed as a one-time bump but a durable trend.
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