August 2026 Market Commentary: Equity Markets Jump, Jobs & Manufacturing Show Hope

Equity markets jumped in August to cap what had been otherwise a fairly quiet summer, with strong earnings out of the tech sector reinforcing the AI-driven thesis for both stocks and the overall economy.  

We continue to filter the news and noise through our data-driven Three Dials framework, which saw one change during the month of August, as we summarize below. 

TECHNICAL

The momentum trade picked up steam again in August after falling out of favor in July, spurred on in part by a blowout earnings report from Nvidia that suggested continued high levels of demand for the company’s chips. The August market rally took place despite bearish sentiment from retail investors, which could provide a potential tailwind for this rally to continue as tides turn. Overall, our Technical Dial remains in a Positive position.  

ECONOMIC

Despite a period of below-average job creation, the labor market continued to show remarkable resilience in August when unemployment claims came in below 200,000 for the third consecutive week, the longest such stretch since 1969, when the labor force was roughly half of what it is now. Meanwhile, the domestic manufacturing sector has now expanded for eight consecutive months despite price pressures and a struggling consumer. As such, we’re moving our Economic Dial from Negative to Neutral as we continue to expect low but steady growth.  

VALUATION

The recent AI-driven surge has lifted tech sector concentration in the S&P to nearly 40%, dwarfing its peak during the dot-com bubble. Despite another strong quarter for earnings and bullish guidance, stretched P/E ratios at the top are still a cause for concern, and thus our Valuation Dial remains Negative. 

MARKET COMMENTARY

Equity markets jumped in August to cap what had been otherwise a fairly quiet summer, with strong earnings out of the tech sector reinforcing the AI-driven thesis for both stocks and the overall economy.

The blue-chip index gained +3% for the month and is now up +13% year-to-date. International stocks rallied +2% in August for a +15% full-year gain on the MSCI ACWI ex-US Index. Small-cap stocks added another +1% this month, with the Russell 2000 index continuing its strong year with a +20% return so far in 2026.

Within fixed income, bond markets were roughly flat for both the month and the year after a volatile month for rates, with 30-year treasury yields briefly touching 5.3% for the first time since 2007 on concerns over inflation and rising government debt.

Commodity prices were also higher across the board, with oil prices again rising with renewed conflict in Iran, while Gold and Bitcoin prices spiked on dollar weakness. The Bloomberg Commodity Index is now up +32% for the year after a +7% gain in August.