August 2026 Market Update: Record Highs, Narrow Breadth, and a Fed That Might Hike

by Jonathan Dane of Defiant Capital Group, 9/9/26

august-2026-market-update

The S&P 500 gained 2.7% in August 2026 and four indexes hit all-time highs, but only five of eleven sectors rose and the Fed’s speech at Jackson Hole put a rate hike back on the table.

MONTHLY MARKET UPDATE

  • The S&P 500 gained 2.7% in August and set a new high, joined at record levels by the Dow, the Russell 2000, and the equal-weight S&P 500. However, only 5 of 11 sectors finished higher, led by Energy with a 7.0% gain, and followed by Technology (up 6.2%), Materials (up 6.0%), and Health Care (up 4.9%).
  • Growth won the month, but Value is still the YTD winner. Large-cap growth gained 3.8% for the month, outpacing a 2.6% gain for large-cap value. Year to date, value has returned 23.8% and growth 4.1%.
  • Bonds gained even as short-term yields rose. The US Bond Aggregate returned 0.4%, while the 2-year Treasury yield climbed to 4.34% and the 10-year rose to 4.75%. However, the 30-year did slightly ease to 5.24%.
  • The Fed’s Jackson Hole speech reset the Fed policy conversation. Fed Chair Kevin Warsh flagged PCE inflation at 3.7% over 12 months and 4.1% annualized over six, and told the audience he was “committed to a discipline, not to a decision.”
  • International and hard assets led. Emerging markets returned 3.4% (up 24.4% YTD) and developed markets gained 2.0% (up 14.2% YTD). Gold gained 9.4% as it rose to $4,494, silver rose 16.2%, and WTI crude added 2.0% to finish at over $86 a barrel.

Market Breadth is Shifting (again), This Time with Interest Rates

Four different indexes set all-time highs in August: the S&P 500, the Dow, the Russell 2000, and the equal-weight S&P 500. That list spans mega-cap technology, blue chips, small caps, and the average large company, which normally signals broad participation. However, dispersion under the surface continues to be volatile, with only five of eleven sectors finishing higher, down from seven in July (similar to this past Spring when eight of eleven sectors ended May in the red). Energy continues to benefit from volatility around oil, while Technology rebounded from the semiconductor selloff we wrote about last month, and Materials rose on the back of gold’s rebound. Everything that was tied to a lower rate outlook went the other way, with Utilities down almost 5% and Industrials and Real Estate both lower.

See more: What’s at Stake for the Federal Reserve

Style leadership flipped too. Growth beat value for the first time in months, though the slight outperformance barely dents the nearly 20 points of outperformance for value this year (the Russell 1000 Value is up 24% YTD vs. the Russell 1000 Growth’s 4%). Overall we view the strong performance of technology stocks as largely rebounding from July’s damage (which was significantly impacted by press headlines and one-off events), rather than the start of a new leadership regime. We continue to remain optimistic on technology, but will need to see participation broaden again before treating this rally as the start of another long-lived technology bull market.