September 1, 2026
Labor Day weekend traditionally marks the unofficial end of summer and the beginning of fall, bringing changing leaves across the northern states, the return of football season, and, of course, pumpkin spice.
As we head into September, investors continue to balance generally favorable corporate fundamentals with persistent inflation and uncertainty surrounding the direction of monetary policy.
Although inflation has moderated from the elevated levels experienced in recent years, it remains above the Federal Reserve’s 2% objective. Supply-related pressures, including higher energy prices, have contributed to keeping inflation elevated. Against this backdrop, the Federal Reserve has maintained a cautious approach to monetary policy. At its July meeting, the Federal Open Market Committee left the federal funds target range unchanged at 3.50%–3.75%.
Equity markets, meanwhile, continue to trade near record levels, supported in part by strong second-quarter corporate earnings. S&P 500 companies have reported significant year-over-year earnings growth, although the overall results have been influenced by particularly strong contributions from several large companies.
Artificial intelligence remains an important theme for both corporate investment and financial markets. Companies continue to commit substantial capital to data centers, semiconductors, computing capacity and other infrastructure needed to develop and support AI technologies. Recent tax provisions may also allow businesses to immediately deduct certain qualifying capital investments through bonus depreciation, potentially improving near-term cash flow and providing an additional incentive for investment.
The scale of AI-related investment remains significant, but over time, investors are likely to focus increasingly on the financial results generated by that spending. Companies will ultimately need to demonstrate that investments in AI can contribute to greater productivity, revenue growth, improved margins and stronger earnings.
The transition from building AI infrastructure to demonstrating measurable returns on those investments will be an important trend to watch in the years ahead. As with previous periods of technological advancement, the benefits are unlikely to be distributed evenly, making company fundamentals, valuations and diversification especially important considerations for long-term investors.
Through August 31, the Dow Jones Industrial Average, S&P 500 Index and Nasdaq Composite Index are up 3.64%, 5.5% and 5.48%, respectively, year to date. The 10-year and 2-year U.S. Treasury yields ended the month at 4.73% and 4.34%, respectively.
Disclosure: Past performance is not indicative of future results. Investing involves risk, including the possible loss of principal. This commentary is provided for informational purposes only and should not be construed as investment, legal, or tax advice. Market and economic conditions are subject to change, and any forecasts or opinions expressed are based on current information and are subject to change without notice.
