August delivered a solid advance and then handed back a slice of it in the closing days. The S&P 500 finished at 7,686.14, up 2.62% on the month, after a run of record closes that included 7,798.99 on August 13 — its 27th of 2026 — and a first-ever move above 7,800 intraday that session. The Nasdaq Composite led all benchmarks with a 3.93% gain to 26,370.89; the Dow added 1.34% to 53,185.90, a fifth consecutive winning month, after closing above 54,000 for the first time on August 4; and the Russell 2000 managed 0.86%. Two things powered the run: a July CPI print that cooled to 3.4% and an Nvidia quarter that removed any doubt about near-term AI demand. Two things ended it: Chair Kevin Warsh's Jackson Hole warning on August 28 and renewed U.S. airstrikes on Iran two days later.

July CPI Cools to 3.4% · Every Line Matched Consensus

The July CPI report, released August 12, was the month's most consequential data point precisely because it was unremarkable. Headline CPI rose 0.1% on the month and 3.4% year-over-year, a tenth below June's 3.5%; core CPI rose 0.2% monthly and 2.5% annually. All four readings matched the Dow Jones consensus exactly. Shelter, which accounted for roughly two-thirds of the monthly increase, rose just 0.1% and 3.2% over the year. The uncomfortable line was energy, up 14.7% year-over-year — the crude channel from July's war premium working its way into the index even as the aggregate improved. The S&P 500 closed at a record on the release, then extended the run on August 13 when July producer prices came in flat and crude sold off hard.

Warsh at Jackson Hole · "We Have Work To Do"

The FOMC did not meet in August, which made the Kansas City Fed's symposium the month's policy event. Speaking on Friday, August 28, Chair Warsh acknowledged that the summer's inflation readings had come in better than expected but argued they did not show that underlying trends had meaningfully improved. "We must be confident that underlying inflation is moving to our objective, clearly and at sufficient speed," he said. "Otherwise, we have work to do. That's our job, our mandate, and our charge to keep." With CPI at 3.4% and the Fed's preferred PCE gauge at 3.7%, the message was read as an explicit hike warning. The 2-year Treasury yield climbed to 4.28% from roughly 4.23% before the remarks, and traders moved odds of an increase at the September 15–16 meeting to about 50%.

Nvidia's $96.2 Billion Quarter Resets the AI Debate

July's earnings season had punished capital spending that lacked a metered revenue offset. Nvidia answered that critique on August 26 with revenue of $96.2 billion for the quarter ended July 26 — up 18% sequentially and 106% year-over-year — on Data Center revenue of $89.0 billion, itself up 117%, driven by the ramp of Blackwell Ultra infrastructure. Non-GAAP earnings of $2.22 per diluted share beat the $2.08 consensus, and management guided Q3 revenue to roughly $108 billion, with CEO Jensen Huang forecasting about 70% revenue growth in fiscal 2028 — far above the street. The broader season was equally strong: with 97% of the S&P 500 reported, FactSet put Q2 blended earnings growth at 52.0%, the highest since the second quarter of 2021, with 86% of companies beating on EPS.

A Frozen Labor Market · Payrolls Fall, Revisions Bite

The July Employment Situation, released August 7, was the month's clearest sign of a cooling economy. Payrolls fell by 23,000 after a revised +20,000 in June, and the back revisions were severe: May was cut by 66,000 to 63,000 and June by 37,000, leaving the two months a combined 103,000 lower than first reported. The unemployment rate nonetheless ticked down a tenth to 4.1% as the participation rate slipped to 61.4% — the signature of a frozen market where neither hiring nor firing is happening. Average hourly earnings reached $37.62, up 3.2% over the year and therefore below the 3.4% CPI, so real pay went backwards. Consumer confidence eased to 89.4 from 90.2, with the expectations component dropping 5.8 points to 68.2.

PCE Holds at 3.7% · Q2 Growth Confirmed at 1.5%

On August 26 the BEA released both the July Personal Income and Outlays report and the second estimate of Q2 GDP. The PCE price index rose 0.2% on the month and held at 3.7% year-over-year, unchanged from June; core PCE also rose 0.2% monthly and eased to 3.3% from 3.5%. Personal income advanced 0.4% and disposable income 0.5%, but real PCE was flat and the saving rate fell to 3.0% — households defending consumption out of savings rather than income. Q2 real GDP was confirmed at 1.5% annualized, unrevised from the advance estimate, though consumer spending was marked up to 3.4% from 3.2% and real final sales to private domestic purchasers to 4.2% from 3.9%. Core demand, in other words, is running well ahead of headline GDP.

Tariff Wall Against Canada · Strikes Resume on Iran

Two policy shocks bracketed the month's back half. After three days of talks in Washington collapsed, the United States imposed 50% tariffs on roughly $20 billion of Canadian goods effective Saturday, August 22, covering furniture, plastics, plywood, electrical equipment, building materials and more. Prime Minister Mark Carney said Ottawa would match the duties "dollar for dollar" beginning September 8 and, likening the action to a conflict, told reporters: "You're at war when you get attacked. We got attacked." Then, on Sunday, August 30, U.S. forces struck two Iranian rocket launchers on Larak Island that CENTCOM spokesman Captain Tim Hawkins said were preparing to lay mines in the Strait of Hormuz — the first military action in a month. Iran's Revolutionary Guard retaliated against American bases in Jordan. Brent for November delivery jumped 3.2% to $90.90 and October WTI rose 3.5% to $86.28 on Monday morning; equities gave back ground into the close.

Cross-Asset Repricing · Gold's Best Month Since January

The asset-class scoreboard captured a market pricing both inflation risk and geopolitical risk at once. Gold was August's standout, climbing 9.48% to $4,431.82 an ounce — its strongest month since January — as the Hormuz premium and a hawkish Fed chair pushed capital toward hard assets; the metal actually peaked near $4,648 on August 25 before shedding roughly 4.4% in the final week. WTI added 1.99% to $86.18 despite OPEC+ agreeing on August 2 to lift September output by 188,000 barrels per day, completing the rollback of its 2023 voluntary cuts; national retail gasoline averaged $4.085 a gallon on August 24. Bitcoin rebounded roughly 24% to about $78,559, still 10.22% below its Dec. 31 level. The U.S. Dollar Index slipped 0.36% to 99.44, while the 10-year Treasury added a single basis point to 4.75% — its highest close since January 2025, and a deceptively quiet headline for a difficult month in bonds, with yields grinding higher across the curve and most fixed-income sectors posting modestly negative total returns.