Asset Management
09/14/2026 Market Strategy
September 14, 2026
Rain Before Rainbows
We Paraphrase Dolly Parton as Markets Traverse a Period of Transition
Key Takeaways
- Last week’s consumer price report showed core inflation rising by more than expected (up 0.3% compared to the 0.2% median estimate in Bloomberg’s survey). Although the “miss” was small and the 12-month core inflation rate fell a tenth, concern prevailed that inflation risks are mounting.
- The CPI report confirmed price pressures noted in the producer price survey released the previous day.
- The data on prices in August led to a repricing of the odds of a hike by the Federal Reserve at its September 16 meeting. The market is now pricing in about a 90% chance of a 25bp hike by the Fed this week, up from around 60% at the start of last week.
- Renewed flare-ups of attacks on tankers and pipelines in the Middle East sent the price of oil to triple-digit levels. West Texas Intermediate crude ended the week at $100.05/ bbl.
- This week brings fresh data on retail sales, housing starts, the Michigan consumer sentiment index, and the leading index.
Last week saw concerns about inflation rise after the core CPI came in slightly higher than expected. The 10-year Treasury yield surged higher and oil prices reached levels not seen since April. Stock prices and bond prices fell for the week with stocks regaining some lost ground last Friday on increased expectations the Fed would raise its benchmark rate this week.
After the higher than expected levels reflected in recent data, we’re thinking a Fed rate hike more than likely especially after oil prices spiked last week.
We Will Never Forget
Resilience remained the operative word for the US in challenging times on a broader level than just the markets as the twenty-fifth anniversary of the savage terrorist attack on the World Trade Center on Sept. 11, 2001 was commemorated last Friday and those who were lost and those who survived were recognized in gatherings across the country.
Q2 Earnings Season Nears End
Earnings results continued to surprise to the upside as earnings season moved towards closure last week with just one stock (belonging to the industrial sector) left to report late this month.
Second quarter earnings kept surprising to the upside this season. Profits were up 53% from a year earlier on revenue growth of 16% as of the end of last week.
Ten of the eleven sectors reported positive earnings growth for the period with only one showing negative earnings growth (health care).
Of the 10 sectors posting positive earnings growth, two are at triple-digit rates, seven are at double-digit rates, one at a single-digit rate.
Earnings results suggest to us that while the earnings growth was well diversified across the sectors, the equity market has not necessarily or yet rewarded stocks within the winning sectors commensurate with their earnings growth.
Near Two Thirds and Three Quarters Done
With two thirds of Q3 and three fourths of the year near done, traders and investors will have a broad palette of economic data and the Fed’s FOMC interest rate decision on Wednesday to review this week.
What’s the Market Telling Us?
With futures showing a 90% expectation of a rate hike (as of last Friday) from the Fed this Wednesday, we’d expect a modest rate increase that could push stock prices higher and trim bond yields slightly.
Should the Fed stay “on pause” holding its benchmark rate after the recent higher than expected increases in the PPI and the CPI--- some disappointment by the market could be reflected in stock and bond prices.
We had for some time expected the Fed would stay on pause through year-end. After the higher than expected levels reflected in recent data we’re thinking a tweak more than likely especially after oil prices spiked last week. In our view the implications of diesel fuel at record high levels simply affects too many shipments of all kinds of goods touching business and the consumer and justifies a rate hike.
For all the noise in and around the stateside markets over much of this year, as of last Friday the S&P 500 was off just 1.8% from its recent record high of 7798.99 reached on August 13.
On a year-to-date basis, the S&P 500 is up 11.9% with 10 of its eleven sectors up as much as 44.5% (energy) to as little as up 1.9% (communication services). Only two sectors have delivered negative price performance: utilities and consumer discretionary, which are respectively off 1.4% and 3% since the start of the year.
We continue to suggest that intermediate- and longer-term investors should not be surprised if the VIX (currently at relatively low levels), jumps higher on near-term negative news items, creating some indigestion for the markets.
While bears, market skeptics, and nervous investors can make almost any piece of news seem like the coming of a bear market, the reality is that resilient fundamentals can provide positive offsets to counter such negative stories.
Stay the Course
Investors with intermediate- and longer-term goals should, in our view, consider that the economic and corporate fundamentals that underpin revenue and earnings growth along with resilience in job growth and consumer spending could support the market to deliver positive moves ahead.
Notwithstanding periods when indicators seem to veer toward a patch of slowing--whether in jobs growth or consumer spending-- responsible monetary policy, experienced corporate managers, and innovation that can lead to substantial increases in productivity could well benefit investors practicing prudent diversification and patience.
Where We Stand
We continue to suggest that intermediate- to long-term investors should avoid blindly buying the dips on market volatility but rather seek out the “babies that get thrown out with the bathwater” in market declines.
Diversification with an emphasis for quality remains key in our view to delivering positive results in an environment that remains highly transitional stateside and internationally.
Geopolitical Overhang Remains
An overhanging risk to the markets remains the hostilities between the US and Iran that remain a threat to stabilizing inflation and restoring sustainable economic growth globally.
Uncertainty in our view is always part and parcel of the markets just as in life. The key to navigating through it in our view remains to position assets with diversification, patience, and right-sized expectations.
Stay tuned.
Name:
John Stoltzfus
Title:Chief Investment Strategist, Oppenheimer Asset Management Inc.
John is one of the most popular faces around Oppenheimer: our clients have come to rely on his market recaps for timely analysis and a confident viewpoint on the road forward. He frequently lends his expertise to CNBC, Bloomberg, Fox Business, and other notable networks.
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