Weekly Commentary (08/24/2026) – Stocks Pull Back as Yields, Oil, and AI Volatility Return

Markets pulled back last week as investors had to digest higher bond yields, rising oil prices, and renewed volatility in the AI and semiconductor trade.

Earnings and the AI trade

Earnings remain a support for the market, but they are no longer enough to keep investors from questioning valuations. Semiconductors and AI-related stocks have been especially volatile as investors weigh the size of the capital spending cycle against the eventual return on that spending. The long-term AI investment story remains compelling, but the short-term price swings are a reminder that even strong themes can become crowded. That is especially relevant late in a bull market. The current advance has been powerful, but the longer a market rises, the more dependent it becomes on earnings growth, reasonable valuations, and investor confidence staying intact.

The bond market

The bond market was again a major source of concern. The 10-year Treasury yield rose 6 basis points last week to 4.74%, and the Bloomberg Aggregate declined. Treasury’s announcement that it would increase buybacks of longer-dated securities briefly helped the market, but the relief did not last. Investors appear more focused on the larger issue: the government still needs to finance large deficits at a time when inflation remains sticky and global demand for long-term bonds is less certain. Higher long-term yields create a headwind for stocks, housing, borrowing costs, and the federal budget itself.

Oil

Oil prices also moved higher as the U.S.-Iran conflict continued. Markets may be getting somewhat numb to the headlines, but they are not immune to the consequences. Oil rose nearly 7% last week, and sustained pressure in energy prices would make the Fed’s job harder by feeding inflation expectations and reducing consumer purchasing power.

The week ahead

Economic data remain mixed. The market continues to look for evidence that growth is slowing enough to relieve inflation pressure, but not enough to threaten earnings. This week brings new home sales, consumer confidence, durable goods, the second estimate of GDP, personal income and spending, PCE inflation, jobless claims, inventories, and consumer sentiment, along with Nvidia’s earnings report on Wednesday. PCE inflation will likely receive the most attention because it feeds directly into the Fed’s policy debate.

We continue to advise investors to be disciplined in adhering to their investment policy and patient when the markets’ winds are pushing against the planned course.

“The investor’s chief problem and even his worst enemy is likely to be himself.” Benjamin Graham, The Intelligent Investor

Sources: Market data: J.P. Morgan Asset Management, Weekly Market Recap, August 24, 2026. Index returns, yields, key rates, and commodity prices as cited in the Weekly Data Center. All equity returns represent total return for the stated period. Oil and gold: Wall Street Journal Markets Digest, August 24, 2026. Economic data: MarketWatch.com. Charts and portfolio data: YCharts.com. Newman Dignan & Sheerar believes these sources are reliable but cannot guarantee the accuracy or completeness of third-party data and assumes no liability for errors or omissions.

Disclosures: This material is for informational and educational purposes only and should not be relied upon as investment, legal, or tax advice, or a recommendation of any particular security, strategy, or investment product. Any economic forecasts or market outlooks expressed herein are forward-looking statements, subject to change without notice, and may not materialize. Investors cannot invest directly in an index. Index returns do not reflect the deduction of fees, commissions, or expenses, which would reduce overall performance. Past performance does not guarantee future results. Diversification does not guarantee investment returns and does not eliminate the risk of loss. This material does not consider the investment objectives, financial situation, or unique needs of any individual investor. Consult your financial advisor before making any investment decisions.