Executive Summary

August was a strong month that ended on a hawkish note. Global equities pushed back to record highs through the first three weeks as cooling inflation data, a de-escalating oil picture, and a robust Q2 earnings season revived the risk-on trade and pulled capital back into the AI and semiconductor complex. The advance faded into month-end after Federal Reserve Chair Kevin Warsh used his Jackson Hole address to signal that inflation was not slowing meaningfully, which lifted rate-hike expectations and drove long-dated Treasury yields to multi-decade highs.

The S&P 500 closed the month up roughly 5%, having set a fresh record intra-month near 7,815 before giving back part of the gain in the final week. The S&P 500 reached a new all-time high of 7,814.88 in August 2026, driven by cooler-than-expected inflation data, stable Federal Reserve interest rates at 3.50 percent to 3.75 percent, and strong performance from technology and AI-related stocks. The index surpassed its previous closing peak set in early June, and the Dow closed above 54,000 points for the first time ever early in the month on strong earnings and hopes for progress on reopening the Strait of Hormuz. The tone shifted late: Treasury yields at the short end of the curve spiked after Warsh said in Jackson Hole that the central bank still has “work to do” to bring inflation under control, and markets moved to price in around a 57% chance that the Fed will raise rates by 25 basis points in September, up sharply from about 40% a week earlier. The two standout non-equity moves were a sharp rebound in gold and the strongest August for Bitcoin since 2017.

Equity Markets Performance

U.S. indices gained across the board, led by a rebound in mega-cap technology. The S&P 500 added approximately 5% and set a record high mid-month before the late-month yield-driven pullback. The Nasdaq Composite led the large-cap indices with a gain in the high single digits, closing around 26,400, as chip stocks recovered following a weak stretch earlier in the summer. The Dow gained more modestly, closing near 53,560 after touching a record above 54,000 early in the month. Small caps lagged; the Russell 2000 finished around 2,970, held back by rising long-end yields.

The month’s shape mattered as much as the level. Early August rallied on a soft July payrolls print and cooling inflation. July nonfarm payrolls contracted by 23,000 jobs, far below the roughly 83,000 addition Wall Street expected, with the unemployment rate at 4.1%, which initially reduced the perceived urgency for further Fed tightening. The middle of the month saw a pullback on rising Treasury yields, and the final stretch was a tug-of-war between a blockbuster Nvidia report and Warsh’s hawkish pivot. Nvidia shares jumped 8.7% after it beat expectations and forecast revenue growth of 70% in fiscal 2028, well above the 44% analysts expected, which lifted the whole semiconductor complex into month-end even as the rates backdrop turned less friendly.

International markets were broadly positive. European equities held near record highs, supported by strong Q1–Q2 earnings and a continued rotation into cyclicals; the STOXX Europe 600 and Euro STOXX 50 were up 9.5% and 9.7% year-to-date through the end of July, with the FTSE 100 up 9.4%. Chinese equities were firm, and Korea’s KOSPI rebounded after a brutal July, helped by a sharp recovery in Samsung and SK Hynix. India posted a modest gain, supported by softer oil and continued foreign inflows. 

Sector Performance

Technology led again, and the leadership narrowed rather than broadened. Chipmakers have swelled to roughly 42% of the S&P technology sector and nearly 20% of the entire S&P 500, up sharply from around 25% and 12% just a few months earlier. The Q2 earnings backdrop was supportive across the board: all 11 sectors of the S&P 500 posted earnings growth from a year earlier, with three of them posting triple-digit earnings gains.

• Information Technology (XLK): the clear leader. Tech led month-to-date with a gain of more than 7% by mid-August, and Nvidia’s late-month report extended the move. Semiconductors did most of the work.
• Health Care and Materials: relative outperformers on select days, with Merck and Johnson & Johnson supporting the Dow and materials names catching a bid as the dollar softened.
• Financials: firm, helped by strength in crypto-linked names as Bitcoin rallied hard. Robinhood and Coinbase were notable gainers.
• Communication Services: a laggard. The sector fell more than 1% month-to-date by mid-August, lagging the broader tape despite the AI-advertising theme. 
• Energy: weak, reversing July’s leadership. With oil trending lower through the month as Hormuz flows recovered, the sector gave back much of the prior month’s gains.
• Rate-sensitive sectors (Real Estate, Utilities): pressured late in the month as the 30-year yield pushed toward multi-decade highs.

Fixed Income

Treasury yields rose over the month and finished at the highs, driven by sticky inflation and Warsh’s hawkish message. As of August 28, the 2-year yield stood at 4.36%, the 10-year at 4.72%, and the 30-year at 5.21%, with the long bond near multi-decade highs. The Fed held the funds rate at 3.50%–3.75%, but the market narrative flipped from “extended hold” toward a live September hike. 

The catalyst was Jackson Hole. In his first major speech since taking the chair in May, Warsh said 2% inflation is a firm and fixed objective, that financial conditions are not currently restrictive, and that recent PCE and CPI data, while better than expected, do not indicate a meaningful improvement in underlying inflation trends. The data cut against any easing case as well: the July PCE price index rose 0.2% month-on-month, above the 0.1% estimate, with annual inflation rising to 3.7%. Two other themes pressured the long end. First, fiscal supply: the Treasury moved to double bond buybacks for 10- to 30-year government debt, which briefly cut yields before broader debt-sustainability concerns reasserted themselves. Second, the sheer scale of the federal interest bill, with net interest payments now running ahead of major spending categories. 

Commodities

Metals

Gold staged a powerful rebound, one of the month’s defining moves. Gold rose about 10% in August from near $4,000, its best monthly gain since January, after three soft data prints in one week reshaped the September rate calculus. The metal traded up toward $4,600 by late month; December gold hit $4,569.40 per ounce on August 20, its highest since mid-May and a fifth straight weekly gain. The structural bid remained official-sector demand: central banks bought a quarterly record 288.9 tonnes in Q2, a 62% increase year over year and the strongest second-quarter total on record, even as retail ETF holders were net sellers. The rebound was as much an oil-and-Fed story as an inflation story: easing energy prices pulled headline inflation fears lower, which revived the case for a less punitive rate path, though Warsh’s late-month tone capped the advance.

Silver participated but the move was concentrated in gold. After a weak second quarter, silver recovered off its summer lows back into the $80s, though the rally lacked the intensity of January’s squeeze, when the metal set a record above $120.

Energy

Oil eased over the month as the supply shock continued to unwind. Crude fell below $83 a barrel by late August, with traders increasingly viewing the Iran situation as an economic and sanctions confrontation rather than an imminent threat to physical supply. Flows through the Strait improved materially: Goldman Sachs estimated Persian Gulf oil exports had climbed to around 15–16 million barrels per day, still below the pre-conflict 22–24 million but well above the March low of about 5–6 million. Iran and Oman reached a revenue-sharing framework for the strait, though Tehran stressed this did not guarantee an immediate reopening. Brent oscillated on headlines, trading near $79 early in the month, spiking toward the mid-$90s mid-month, and settling near $89 by month-end. OPEC+ also agreed to raise September output by 188,000 barrels per day, and weak Chinese demand added to the softer tone. The setup remained unresolved rather than settled: the Trump administration reportedly told mediators it does not intend to revive the terms of the preliminary June agreement with Iran that later collapsed. 

Cryptocurrency

Bitcoin had its strongest August in nearly a decade. It gained roughly 22% over the month, ranging from a low near $62,280 to a high above $81,000 before settling around $78,000. That made it Bitcoin’s best August since 2017, with the rally fueled by record short liquidations and heavy ETF inflows, rallying from early-August lows near $62,000–$64,000 to briefly surpass $81,000 before settling around $78,000–$79,000 by August 30. U.S. spot Bitcoin ETFs took in roughly $2.72 billion by August 24, the strongest month of 2026 at that point. Context tempers the enthusiasm: Bitcoin remained down roughly 28–33% year-to-date and about 37% below its 2025 peak near $126,000. International Markets

• Europe (STOXX 600 / FTSE 100): near record highs through the month, supported by strong corporate earnings and a rotation into banks, industrials, and other cyclicals. A late-month lift came from the global chip rally after Nvidia’s results. The UK held up despite its energy and financials weighting.
• China: firm. Domestic technology and industrial names participated in the regional AI supply-chain recovery, and cheaper energy input costs helped sentiment.
• South Korea (KOSPI): a sharp rebound after a very weak July. South Korean chip stocks rallied, with Samsung Electronics jumping over 7% and SK Hynix gaining 6.6% in a single session, reversing part of the prior month’s semiconductor-led drawdown.
• India (Nifty 50): a modest gain. Softer oil is a clear positive for India’s inflation, trade deficit, and the rupee, and foreign inflows continued.
• Emerging markets broadly: recovered from July’s decline as the semiconductor complex stabilized and Nvidia’s guidance reassured on AI demand, given EM’s heavier exposure to the chip manufacturing supply chain.

Outlook: September 2026

Three themes will drive September.

First, the Fed. The September 15–16 FOMC meeting is the dominant variable, and for the first time this cycle the debate is about a hike rather than a hold or a cut. Warsh’s Jackson Hole message was deliberately hawkish, PCE is running near 3.7%, and the market is pricing better-than-even odds of a 25 basis point increase. A hike would pressure both growth equities and the long end of the curve, where the 30-year already sits above 5.2%. The August jobs report and the next CPI print will be decisive for how that pricing settles.

Second, Iran and the Strait of Hormuz. The supply shock has been easing, but it has not been resolved. Flows are recovering and an Iran–Oman framework is in place, yet Washington has declined to revive the June terms and Iranian officials have signaled a willingness to escalate if diplomacy fails. A durable reopening would push oil lower and reinforce the disinflation trade. A breakdown would re-engage the higher-oil, higher-yields, lower-equities pattern seen earlier in the year.