Jackson Hole Aftermath: What's Next for Markets? 31/08/2026
Market Wrap
U.S. stocks ended lower on Friday after Federal Reserve Chair Kevin Warsh struck a cautious tone on inflation at Jackson Hole, though all three major indexes still managed to finish the week with gains.
The S&P 500 slipped 0.3% to 7,711.76, while the Nasdaq Composite fell 0.5% to 26,402.42 as weakness in semiconductor stocks, including Nvidia (NVDA) and Intel (INTC), weighed on technology. The Dow Jones Industrial Average was little changed at 53,559.99.
Despite Friday's pullback, the S&P 500 gained 0.5% for the week and the Nasdaq advanced 0.9%. The Dow also rose 0.5%, snapping a two-week losing streak.
At Jackson Hole, Warsh pushed back against the idea that recent softer inflation readings signal a decisive improvement in underlying price pressures. His comments reinforced expectations that the Fed will remain cautious on rates until policymakers see more convincing evidence that inflation is moving sustainably lower.
Corporate earnings also drove individual moves. Gap (GAP) surged about 13% despite mixed quarterly results after announcing new leadership for its Old Navy business. Marvell Technology (MRVL), meanwhile, dropped more than 10% after its current-quarter gross-margin outlook disappointed investors.
Geopolitical risks returned to focus early Monday after the U.S. struck Iranian rocket launchers on Larak Island in the Strait of Hormuz, raising concerns about another escalation in the region. Oil prices jumped in response, with WTI crude gaining more than 2% to around $85 a barrel and Brent approaching $90.
Attention now shifts to a busy economic calendar, headlined by Friday's August employment report. Manufacturing and services data will also be closely watched for fresh clues on the strength of the U.S. economy and the Fed's next move.
Warsh's Hawkish Turn Lifts September Rate-Hike Odds
Federal Reserve Chair Kevin Warsh's Jackson Hole speech delivered a more hawkish message than markets had expected, pushing investors to increase bets on another interest-rate hike as the Fed keeps its focus firmly on inflation.
Fed-funds futures now imply roughly a 60% probability of a quarter-point increase in September, up from about 56% on Friday. Deutsche Bank expects an even more aggressive path, forecasting two 25-basis-point hikes before year-end, in September and December.
Warsh emphasized the Fed's commitment to returning inflation to its 2% target and suggested policymakers may need to tighten further if disinflation fails to progress quickly enough. His assessment that the U.S. economy remains resilient also weakened the argument for near-term rate cuts.
Markets are now likely to become even more sensitive to incoming inflation and labor-market data. Some strategists remain skeptical that economic conditions justify another hike, pointing to softer employment indicators and recent improvement in inflation readings.
Warsh's policy stance could also create tension with the Treasury. His preference for using short-term rates as the Fed's primary policy tool comes as the Treasury expands purchases of longer-dated government debt in an effort to ease pressure on long-term yields.
The hawkish shift was already being reflected across global markets Monday, with Asian equities declining and gold retreating as higher rate expectations strengthened the dollar.
With September increasingly viewed as a live meeting, this week's economic data — particularly Friday's August jobs report — could play a major role in determining whether the Fed follows Warsh's rhetoric with another rate increase.
Stocks on the Move
- PayPal (PYPL): Shares plunged nearly 16% after a report that Advent and Stripe had abandoned their pursuit of the payments company, ending speculation around what could have been one of the largest leveraged buyouts.
- Affirm (AFRM): Shares jumped 13% after fiscal fourth-quarter revenue of $1.17 billion topped expectations. The buy-now-pay-later company also issued stronger-than-expected revenue guidance for the first quarter.
- Marvell Technology (MRVL): Shares dropped nearly 8% as investors focused on a softer margin outlook. The chipmaker expects adjusted earnings of about $1.10 per share for the current quarter, slightly above consensus, while gross-margin guidance came in at or below expectations.
- Rubrik (RBRK): Shares fell more than 5% despite beating second-quarter earnings and revenue estimates. Investors focused on an 81% adjusted gross margin, which came in below the 81.7% consensus.
- Autodesk (ADSK): Shares slipped nearly 4% after its earnings outlook disappointed Wall Street. The company expects third-quarter adjusted earnings of $3.04 to $3.09 per share, below the $3.14 consensus.
Watchlist: XOM, COIN, MSTR, NVDA, META, GOOGL, WDC, SNDK, PYPL, MRVL
Key Economic Events Today
Economic Data (EST)
No major economic news today.
Earnings
Before Market Open: Science Applications International Corp. (SAIC), So-Young International (SY), LexinFintech Holdings (LX)
After Market Close: Cango Inc. (CANG), Pyxis Tankers (PXS)
