Last Friday this newsletter told you that you wanted the August jobs number to come in soft. It came in at 162,000. Four sessions later crude is above $100, the US 10-year yield is knocking on 5%, and the Federal Reserve is being argued into a rate rise it never planned to make. That is why we built Winvesta Crisps, to cut through the noise and tell you what actually moved markets and why. 60,000+ investors from all over India are already in. What about you?
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US stocks fell in all four sessions of this holiday-shortened week, and not one of those days was about a company. West Texas Intermediate crude went from about $93 to $102.48 a barrel in three trading days, the 10-year Treasury yield pushed above 4.95% for the first time since October 2023, and the market's odds of a rate rise at next week's Fed meeting climbed from roughly 60% to around 70%, per CNBC and CME Group futures pricing.
The August CPI report lands at 8.30am New York time on Friday, which is 6pm in India, after this article reaches you. It is the last inflation print the Fed sees before it meets on 15 and 16 September.
📊 Market recap
The week ran in one direction, and it got steeper each day. Markets were shut on Monday for Labour Day, so this was four sessions, and all four were red.
Start with the damage. Against last Friday's close of 7,718.60 on the S&P 500, 26,506.99 on the Nasdaq Composite and 53,414.25 on the Dow, Thursday left the S&P at 7,591.70, the Nasdaq at 26,081.72 and the Dow at 52,064.10, per CNBC and Investrade. That is the S&P in the high-7,500s and down roughly 1.6% on the week, the Nasdaq in the low-26,000s and down about 1.6%, and the Dow in the low-52,000s and down around 2.5%. The Russell 2000 fell from 2,960 on Tuesday to 2,890 by Thursday, so small caps took it worse than the headline numbers suggest.
Tuesday reopened the war trade, and the Dow wore it. Traders came back from the long weekend to news that Iran-backed Houthi rebels in Yemen had attacked Saudi energy facilities, per CNBC. Brent moved up towards $98 and WTI settled around $93.03, up about 1.7%. The Dow fell 626.72 points, or 1.17%, to 52,787, while the S&P 500 lost 0.58% to 7,673 and the Nasdaq slipped just 0.32% to 26,421, per Investrade. Look at the spread between those three numbers, because it explains the whole week: the industrial, energy-consuming, rate-sensitive index got hit four times harder than the tech index. Healthcare led the decliners after Novartis failed two late-stage drug trials. Canada's retaliatory tariffs on US goods also took effect just after midnight, per the Washington Post, which nobody had room to care about.
Wednesday, the bond market joined in. Brent settled up 3.36% at $101.21 and WTI gained 3.25% to $96.05, the highest settle since May for both, per CNBC. Then the Treasury Department said it would triple its buyback of longer-dated government debt to $6 billion, and the 10-year yield jumped roughly 15 basis points to about 4.85%, its highest since November 2023. The S&P 500 fell 0.48% to 7,636.36, the Nasdaq 0.64% to 26,253.34 and the Dow 404.99 points, or 0.77%, to 52,381. Energy was the only sector doing real work, up 0.63%, with technology up 0.29%. Consumer staples, consumer discretionary and industrials all fell about 1%, per Investrade. Apple held its first product event under new chief executive John Ternus the same afternoon and unveiled a foldable iPhone starting at $2,099, per CNBC and Yahoo Finance. It barely dented the tape.
Thursday was the day oil stopped being an energy story. WTI closed at $102.48, up 6.7%, its first close above $100 in nearly two months. Brent gained 5.9% to settle at $107.63 after briefly trading above $108, per CNBC. The war between the US and Iran is now in its seventh month. The 10-year yield went with it, rising about 10 basis points to roughly 4.94%, with the 30-year at 5.362%, the highest 10-year reading since October 2023. August producer prices landed in the middle of all that: PPI rose 0.4% for the month, in line with the Dow Jones consensus, but 5.4% year on year against a 5.3% estimate, with final demand energy up 4.2% in the month and 24.4% on the year, and diesel alone up 24.1%, per CNBC and the Bureau of Labour Statistics. Core PPI was the one soft spot at 0.2% against a 0.3% forecast. The S&P 500 fell 0.58% to 7,591.70, the Nasdaq 0.65% to 26,081.72 and the Dow 316.56 points to 52,064.10, a fourth consecutive losing day. Rate rise odds for next week moved to about 70%, up from 62% the day before, per Investrade. The European Central Bank raised rates to their highest since 2025 on the same day.
Friday has not happened yet. US futures were marginally higher early on, with S&P 500 futures up about 0.19%, per CNBC. Everything else is waiting on the CPI print.
The week's verdict is uncomfortable. Nothing broke. There was no crash, no credit event, no earnings disaster. The market simply spent four days quietly marking down every asset that needs cheap money, because a supply shock in the Gulf is being converted, dollar by dollar, into a tighter Federal Reserve.