Weekly Market Recap: Markets Hold Steady as Fed Hikes and Oil Tops $100

Market Overview

U.S. equities finished a volatile week mixed as investors navigated surging oil prices, higher Treasury yields, geopolitical uncertainty, and the Federal Reserve’s first rate increase since 2023. The S&P 500 ended nearly flat, slipping 0.06%, while the Nasdaq gained 0.73%. The Dow fell 1.65% and the Russell 2000 declined 1.47%, reflecting continued pressure on smaller and more economically sensitive companies.

Sector performance showed a clear divide. Health Care led with a 1.9% weekly gain, followed by Communication Services at 1.2% and Technology at 1.1%, as artificial intelligence-related stocks found support later in the week. Utilities fell 3.0%, Financials declined 2.3%, and Real Estate dropped 2.0%, while Energy surprisingly finished 0.6% lower despite another sharp rise in crude prices.

International markets also struggled. MSCI EAFE declined 1.58% and emerging markets fell 0.55% as higher global yields, elevated energy costs, and central-bank tightening weighed on sentiment. European equities weakened amid renewed Russia-related tensions and energy supply concerns, while Asian markets were mixed following the Bank of Japan’s latest rate increase.

Fixed income markets were relatively stable despite significant movement in yields. The U.S. Aggregate Bond Index slipped just 0.03%, while the 10-year Treasury yield rose to 5.01% from 4.96% and the two-year yield climbed to 4.76% from 4.63%. The average 30-year fixed mortgage rate increased to 6.99%.

Oil remained one of the market’s biggest stories, with WTI holding above $100 per barrel after briefly reaching $106 as attacks on Saudi energy infrastructure heightened supply concerns. Gasoline prices also moved sharply higher, while gold approached $4,400 per ounce and the U.S. dollar strengthened following the Fed decision.

Federal Reserve Insights and Economic Roundup

The Federal Reserve unanimously raised its target range for the federal funds rate by 0.25 percentage points to 3.75%–4.00%, marking its first rate increase since 2023. In its statement, the FOMC described economic activity as expanding at a solid pace while emphasizing that inflation remains elevated. The Fed’s updated projections reinforced that message. Policymakers’ median forecast calls for real GDP growth of 2.3% in 2026 and 2.4% in 2027, while unemployment is projected to remain around 4.1%. Core PCE inflation is expected to finish 2026 at 3.4%, above the Fed’s 2% objective. The median projected federal funds rate stands at 4.1% for both 2026 and 2027 before declining to 3.9% in 2028. 

Taken together, the projections point to an economy that officials expect to remain relatively firm even as inflation stays above target. That combination could keep monetary policy restrictive for longer, particularly if elevated energy prices continue feeding into broader price pressures. For markets, the focus now shifts toward incoming inflation, employment, and activity data for clues about whether additional tightening may be warranted.

The Week Ahead

Monday: Chicago Fed National Activity Index for August is du
Tuesday: ADP employment and Philadelphia and Richmond Fed activity reports take focu
Wednesday: Mortgage applications and preliminary U.S. manufacturing and services PMIs are du
Thursday: Jobless claims, new home sales, current account data, and Kansas City Fed manufacturing arriv
Friday: Durable goods, capital goods, consumer sentiment, and Kansas City Fed services close the week.