Notes from across the investing landscape.

Why Wall Street is getting warm fuzzies over a weak job market

September was a bad month if you were looking for a job, and the stock market thinks that's a good thing. The Bureau of Labor Statistics reported this morning that job growth for September was just 29,000, which is below even the anemic 45,000 average for the past twelve months. Not only that, but previous estimates for July and August were revised down by a combined 60,000 jobs. By the through-the-looking-glass logic of the stock market, the immediate reaction of the market was to soar on the news. This was because investors assume a soft job market could cool the rise in inflationGlossary: A general rise in prices over time that shrinks what each dollar buys. The Federal Reserve aims for about 2% a year. and interest ratesGlossary: The price of borrowing money, shown as a yearly percentage of the amount borrowed. Savers earn it and borrowers pay it; the Federal Reserve’s decisions push short-term rates up or down.. Ultimately though, stock market success relies on both moderate interest rates and earningsGlossary: A company’s profit after all its costs, interest and taxes. Earnings per share (EPS) divides that profit by the number of shares, so companies of different sizes can be compared. growth. Earnings growth is tough to come by without a strong consumer sectorGlossary: One of the 11 groups the stock market is split into by line of business, like technology, healthcare or energy. Every company in the S&P 500 belongs to exactly one., and that means jobs.

What the Citigroup US Earnings Revision Index is hinting right now

One way to look at the direction of professional investor sentiment is in terms of whether earningsGlossary: A company’s profit after all its costs, interest and taxes. Earnings per share (EPS) divides that profit by the number of shares, so companies of different sizes can be compared. estimates are being revised upward or downwards. The Citigroup US Earnings Revision Index shows that more analysts are now making downward rather than upward revisions. This could be a sign that analyst optimism is waning.

Jobs grew. Market tanked.

The Bureau of Labor Statistics announced the best job growth in five months this morning… and the market immediately tanked. This kind of thing often happens—the market reacting badly to good news, and vice versa. There are several reasons for this, which is why Sherman focuses on market data rather than macroeconomic forecasting.

10-year T-bonds hit their highest level since 2007

With 10-year T-bonds rising to their highest level since 2007, and up by more than three-quarters of a point, the recent quarter-point hike in the FedGlossary: The US central bank. It sets the target for short-term interest rates and can buy or sell bonds to steer borrowing costs, aiming for steady prices and maximum employment. rate is the least of the economy's problems.

The larger rate rise on bondsGlossary: A loan you make to a government or company. It pays interest on a set schedule and returns the amount you lent when it matures. When interest rates rise, existing bonds lose value. reflects the concern of real-world lenders with inflationGlossary: A general rise in prices over time that shrinks what each dollar buys. The Federal Reserve aims for about 2% a year. and deficits. That means higher borrowing costs for everyone from home buyers to the US Government.

Fed raises interest rates by a quarter point

As expected, the FedGlossary: The US central bank. It sets the target for short-term interest rates and can buy or sell bonds to steer borrowing costs, aiming for steady prices and maximum employment. raised interest ratesGlossary: The price of borrowing money, shown as a yearly percentage of the amount borrowed. Savers earn it and borrowers pay it; the Federal Reserve’s decisions push short-term rates up or down. by a quarter point. What is of potentially longer-lasting impact is that the Fed's latest economic projections show it expects another rate increaseGlossary: The overnight rate US banks charge each other, held inside a target range set by the Federal Reserve. Nearly every other borrowing rate is priced off it. by the end of the year. Further, they show no rate cut expected in 2027, and for rates in 2027 and 2028 to be half a point higher than they previously forecast.

It's the economic equivalent of the groundhog not seeing his shadow—another year or two of inflationGlossary: A general rise in prices over time that shrinks what each dollar buys. The Federal Reserve aims for about 2% a year. troubles and high borrowing costs. Don't expect interest rates for mortgages, car loans, student loans, or anything else to come down anytime soon.

A lot of energy gets spent trying to guess what the Fed will do.

A lot of energy gets spent trying to guess what the FedGlossary: The US central bank. It sets the target for short-term interest rates and can buy or sell bonds to steer borrowing costs, aiming for steady prices and maximum employment. will do, but whatever they decide about short-term rates, the die is already cast for the economy. InflationGlossary: A general rise in prices over time that shrinks what each dollar buys. The Federal Reserve aims for about 2% a year. is up, and so are bondGlossary: A loan you make to a government or company. It pays interest on a set schedule and returns the amount you lent when it matures. When interest rates rise, existing bonds lose value. rates. Life, and borrowing, are going to be more expensive.

Two-Year Yield Jumped. Stock Indexes Dipped.

The two-year Treasury yieldGlossary: The yearly return on a two-year US government bond. Because it comes due soon, it mostly reflects what investors expect the Federal Reserve to do next. jumped while stock indexes dipped on Friday, August 28, 2026—the latest completed U.S. market session as of August 31. The yield rose to 4.34% from 4.20%. It is a quick gauge of where investors think near-term Federal ReserveGlossary: The US central bank. It sets the target for short-term interest rates and can buy or sell bonds to steer borrowing costs, aiming for steady prices and maximum employment. policy may be headed. The S&P 500Glossary: An index of 500 large US companies, weighted by how much each is worth. When someone says “the market” without naming anything, this is usually what they mean. lost about 0.2%, the NasdaqGlossary: An index of every common stock listed on the Nasdaq exchange, around 3,000 of them, weighted by how much each is worth. It leans hard toward technology, so it runs further than the S&P 500 in both directions. fell 0.5%, and the Russell 2000Glossary: An index of about 2,000 smaller US companies. Smaller firms borrow at floating rates more often, so this index reacts quickly when interest rates move. dropped 1.4%. Earlier that day, Federal Reserve Chair Kevin Warsh stressed persistent inflationGlossary: A general rise in prices over time that shrinks what each dollar buys. The Federal Reserve aims for about 2% a year. and called the Fed’s 2% inflation goal a firm target, but he did not commit to the next rate decision. Even so, the S&P 500, DowGlossary: An index of 30 large, well-known US companies. Unlike most indexes it is weighted by share price rather than company size., and Nasdaq all finished the week higher.

The pattern suggests investors became more alert to the possibility that the Fed could keep rates higher or raise them. It does not prove Warsh’s speech caused every move or that yields will stay elevated. The next checkpoints are the August jobs reportGlossary: The Labor Department's monthly count of jobs added or lost at US employers outside farming, published in the jobs report. on September 4, consumer inflation on September 11, and the Fed’s decision and updated projections on September 16. Markets heard a tougher rate message, but one session does not establish a new trend.

Oil Fell. Stocks and Bonds Both Exhaled.

Brent crudeGlossary: The international benchmark grade of crude oil, from the North Sea. It usually trades a few dollars above WTI, the US benchmark. fell 3.6% on Tuesday, August 25, its second decline after rising in 13 of the previous 14 sessions. Treasury yieldsGlossary: Bonds issued by the US government: bills (a year or less), notes (2 to 10 years) and bonds (20 to 30 years). They are treated as the safest dollar investment. fell with it, while stocks moved higher: the S&P 500Glossary: An index of 500 large US companies, weighted by how much each is worth. When someone says “the market” without naming anything, this is usually what they mean. and DowGlossary: An index of 30 large, well-known US companies. Unlike most indexes it is weighted by share price rather than company size. each gained 0.3%, the NasdaqGlossary: An index of every common stock listed on the Nasdaq exchange, around 3,000 of them, weighted by how much each is worth. It leans hard toward technology, so it runs further than the S&P 500 in both directions. rose 0.7%, and the Russell 2000Glossary: An index of about 2,000 smaller US companies. Smaller firms borrow at floating rates more often, so this index reacts quickly when interest rates move. added 0.5%. The moves came even as tensions between the United States and Iran remained elevated.

That combination showed how quickly markets can respond when one source of inflationGlossary: A general rise in prices over time that shrinks what each dollar buys. The Federal Reserve aims for about 2% a year. pressure eases, even temporarily. Lower oil prices can reduce immediate concern about fuel costs and interest ratesGlossary: The price of borrowing money, shown as a yearly percentage of the amount borrowed. Savers earn it and borrowers pay it; the Federal Reserve’s decisions push short-term rates up or down., but two down days did not erase the prior run-up. Stocks and bondsGlossary: A loan you make to a government or company. It pays interest on a set schedule and returns the amount you lent when it matures. When interest rates rise, existing bonds lose value. both got some relief; the larger energy question was still open.

One Quiet Day Hid Two Big Questions.

The market finished mixed on Monday, August 24, before two events with unusually broad reach. The S&P 500Glossary: An index of 500 large US companies, weighted by how much each is worth. When someone says “the market” without naming anything, this is usually what they mean. fell 0.3%, the NasdaqGlossary: An index of every common stock listed on the Nasdaq exchange, around 3,000 of them, weighted by how much each is worth. It leans hard toward technology, so it runs further than the S&P 500 in both directions. dropped 0.8%, and the Russell 2000Glossary: An index of about 2,000 smaller US companies. Smaller firms borrow at floating rates more often, so this index reacts quickly when interest rates move. lost 0.8%, while the DowGlossary: An index of 30 large, well-known US companies. Unlike most indexes it is weighted by share price rather than company size. gained 0.3%. Treasury yieldsGlossary: Bonds issued by the US government: bills (a year or less), notes (2 to 10 years) and bonds (20 to 30 years). They are treated as the safest dollar investment. eased as oil prices fell. Nvidia was due to report earningsGlossary: A company’s profit after all its costs, interest and taxes. Earnings per share (EPS) divides that profit by the number of shares, so companies of different sizes can be compared. Wednesday, and Federal ReserveGlossary: The US central bank. It sets the target for short-term interest rates and can buy or sell bonds to steer borrowing costs, aiming for steady prices and maximum employment. Chair Kevin Warsh was scheduled to speak Friday.

Those events mattered for different reasons. Nvidia had become the market's largest and most influential stock, making one company's results relevant to a capitalization-weightedGlossary: An index that weights each company by its total market value, so the biggest companies move it the most. The S&P 500 is cap-weighted; its equal-weight version gives every company the same share. index. Warsh's speech could reshape expectations for interest ratesGlossary: The price of borrowing money, shown as a yearly percentage of the amount borrowed. Savers earn it and borrowers pay it; the Federal Reserve’s decisions push short-term rates up or down. across the market. A quiet, uneven session before both events was not evidence that investors knew the answers. Sometimes the most honest market reading is that the important information has not arrived yet.

Oil Rose Again. Stocks Backed Away From Records.

Brent crudeGlossary: The international benchmark grade of crude oil, from the North Sea. It usually trades a few dollars above WTI, the US benchmark. climbed 2.7% to $90.87 a barrel on Monday, August 17, as uncertainty around the war with Iran kept oil prices swinging. Stocks moved lower with it: the S&P 500Glossary: An index of 500 large US companies, weighted by how much each is worth. When someone says “the market” without naming anything, this is usually what they mean. and DowGlossary: An index of 30 large, well-known US companies. Unlike most indexes it is weighted by share price rather than company size. each fell 0.5%, the NasdaqGlossary: An index of every common stock listed on the Nasdaq exchange, around 3,000 of them, weighted by how much each is worth. It leans hard toward technology, so it runs further than the S&P 500 in both directions. lost 0.3%, and the Russell 2000Glossary: An index of about 2,000 smaller US companies. Smaller firms borrow at floating rates more often, so this index reacts quickly when interest rates move. declined 0.4%. The S&P 500 was still close to the record it had set the previous Thursday.

The important part was not simply that oil rose and stocks fell on the same day. Higher energy prices can keep inflationGlossary: A general rise in prices over time that shrinks what each dollar buys. The Federal Reserve aims for about 2% a year. concerns alive and put upward pressure on bondGlossary: A loan you make to a government or company. It pays interest on a set schedule and returns the amount you lent when it matures. When interest rates rise, existing bonds lose value. yields, which can make other assets look less attractive. But oil had already been moving sharply in both directions, so persistence mattered more than one close. Markets stepped back from their records; they did not abandon them.

Wholesale Inflation Paused. Stocks Set a Record.

Wholesale inflationGlossary: A general rise in prices over time that shrinks what each dollar buys. The Federal Reserve aims for about 2% a year. was unchanged in July, according to data released Thursday, August 13. Goods prices fell 0.7%, while services prices rose 0.2%; over 12 months, final-demand prices were still up 4.7%. Markets focused on the cooler monthly reading. Treasury yieldsGlossary: Bonds issued by the US government: bills (a year or less), notes (2 to 10 years) and bonds (20 to 30 years). They are treated as the safest dollar investment. eased, Brent crudeGlossary: The international benchmark grade of crude oil, from the North Sea. It usually trades a few dollars above WTI, the US benchmark. fell 2.1%, the S&P 500Glossary: An index of 500 large US companies, weighted by how much each is worth. When someone says “the market” without naming anything, this is usually what they mean. gained 0.7% to a record, and the NasdaqGlossary: An index of every common stock listed on the Nasdaq exchange, around 3,000 of them, weighted by how much each is worth. It leans hard toward technology, so it runs further than the S&P 500 in both directions. rose 0.8%.

The details kept the report from being an all-clear signal. A flat headline number combined falling goods prices with rising services prices, and the yearly rate remained elevated. That is why one encouraging release can improve the market's mood without resolving the inflation question. The headline paused; the underlying argument did not.

Oil Jumped 5%. Stocks Barely Moved.

Brent crudeGlossary: The international benchmark grade of crude oil, from the North Sea. It usually trades a few dollars above WTI, the US benchmark. jumped 5% to $87.72 a barrel on Monday, August 10, as hopes faded for a quick agreement to reopen the Strait of Hormuz. Stocks moved much less: the S&P 500Glossary: An index of 500 large US companies, weighted by how much each is worth. When someone says “the market” without naming anything, this is usually what they mean. and DowGlossary: An index of 30 large, well-known US companies. Unlike most indexes it is weighted by share price rather than company size. each slipped 0.1%, the NasdaqGlossary: An index of every common stock listed on the Nasdaq exchange, around 3,000 of them, weighted by how much each is worth. It leans hard toward technology, so it runs further than the S&P 500 in both directions. fell 0.3%, and the Russell 2000Glossary: An index of about 2,000 smaller US companies. Smaller firms borrow at floating rates more often, so this index reacts quickly when interest rates move. declined 0.6%. The contrast mattered because the oil market was repricing a direct supply risk while the broader stock market was still sitting close to record highs.

An oil spike can reach investors in stages. It may show up first in energy prices, then in inflationGlossary: A general rise in prices over time that shrinks what each dollar buys. The Federal Reserve aims for about 2% a year. expectations and bondGlossary: A loan you make to a government or company. It pays interest on a set schedule and returns the amount you lent when it matures. When interest rates rise, existing bonds lose value. yields, and only later in company costs or consumer spending. None of those follow-on effects was settled in one session, and the muted index moves made that clear. Oil delivered the warning; the rest of the market had not yet decided how loudly to answer.