The markets are consolidating gains as investors digested renewed escalations in the Middle East, employment data that came in mostly above expectations, and await this week’s inflation data.
The Nasdaq composite dipped 0.3% Friday, but posted a weekly gain of 0.4%. Importantly, the tech-heavy index held above its 21-day exponential moving average following Thursday’s rebound. Its year-to-date gain now sits at 14%.
The S&P 500 slipped 0.4% Friday, which was just enough for it to cling to a gain for the week of 0.1%. The benchmark index now holds a gain of 12.8% for 2026.
The Dow Jones Industrial Average had a 1.7% gain for the week.
The 10-year Treasury yield rose 2 basis points last Friday, to 4.78%. Oil prices inched lower Friday, with West Texas Intermediate futures slipping 0.1% to $91.20 per barrel, well above last week’s level.
Economic data was mixed. The trade deficit widened, and construction spending declined. The Institute for Supply Management (ISM) manufacturing index missed expectations, but the services index came in stronger than expected. August factory orders also surprised to the upside.
The stock market was closed Monday for the Labor Day holiday, but there is still important data due in the shortened trading week. The most pivotal is the release of the Consumer Price Index (CPI) report for August, which drops Friday. The preliminary University of Michigan Consumer Sentiment Index reading arrives that same day, while the producer price index is set for Thursday.
Noteworthy earnings reports dropping in the week ahead include Adobe (ADBE), Oracle (ORCL) and pet retailer Chewy (CHWY).
Please click here for the Looking Ahead report written by Wells Fargo. It contains interesting graphs, tables, and charts. Below are excerpts from that research.
Week in review: August 31 – September 4
Economic news
- August non-farm payrolls rose 162,000 following an upwardly revised 21,000 in July, far exceeding expectations of 55,000. Labor market strength was also evident as the unemployment rate held steady at 4.1% and labor force participation increased to 61.6% from 61.4%.
- Hiring gains were led by food services, local government, education, manufacturing, and healthcare, while information, publishing, and broadcasting employment edged lower.
- August ADP employment data showed the smallest increase in payrolls since January. Private payrolls rose by 38,000, below the median forecast gain of 47,000 from a Bloomberg survey.
- In August, the ISM manufacturing gauge remained in expansion territory for the eighth consecutive month, though it eased to 54.6 from 55.6 and came in below consensus expectations of 55.2. The U.S. services sector showed continued expansion as well. The ISM services index rose 1.3 points to 55.4, beating expectations of a flat reading at 54.1.
- The trade deficit widened to $88.6 billion in July as artificial intelligence (AI) related imports surged and petroleum exports declined. Exports fell 2.1% month-over-month (M/M) to $310.7 billion, led by lower crude oil and gold shipments, while imports rose 2.8% M/M to $399.3 billion on stronger demand for computers, accessories, and semiconductors.
- Construction spending in July continued to remain weak as affordability pressures continued to weigh on potential homebuyers. Total construction spending fell 0.5% M/M, coming in well below expectations for a flat reading.
- Data centers supported by ongoing AI related investment continued to show strong demand, with spending increasing 6.2% M/M and year-over-year growth accelerating to 57.2%.
- Factory orders for U.S.manufactured goods rose 0.9% M/M in July, rebounding from a revised 0.2% M/M decline in June and beating market expectations of a 0.6% M/M increase. Excluding transportation, factory orders rose 0.6% M/M, signaling underlying strength in the sector.
Looking ahead to this week, September 7-11
U.S.
- The focus will be on August inflation data, with the PPI on Thursday and the CPI on Friday.
- Additional market-moving releases include the University of Michigan’s preliminary September consumer sentiment and the Federal Reserve’s (Fed’s) Q2 household net worth report.
- Other economic data include August small business optimism, existing home sales, and federal budget balance, along with July consumer credit and wholesale trade sales.
- Investors will also monitor developments in U.S. tariff policy and the impact of the Iran conflict on shipping through the Strait of Hormuz and Red Sea.
Asia
- In China, attention will focus on CPI, PPI, trade balance, money supply, and foreign reserves.
- Japan’s key releases include finalized Q2 Gross Domestic Product (GDP), August PPI, money supply, and preliminary machine tool orders, along with labor cash earnings, trade balance, and the leading index.
- South Korea will report preliminary Q2 GDP, the August unemployment rate, and early September export and import data.
- Australia’s schedule includes August business confidence and September consumer confidence.
Europe
- The highlight of the week will be Thursday’s European Central Bank policy meeting.
- Eurozone releases include Q2 household consumption, the third estimate of Q2 GDP, and finalized employment data.
- France and Germany will report July industrial production and trade balance data, while Germany will also release finalized August CPI.
- In the United Kingdom, investors will watch August house prices, July GDP, industrial production, trade balance, and the Index of Services.
