Key Events: The Fed focuses on inflation
Markets spent the week caught between two forces: a July PCE report that showed inflation stuck above target due to energy costs tied to the Iran conflict, and a blockbuster earnings report from Nvidia, highlighted the exceptional earnings season.
Fed Chair Warsh tilted the scales towards the inflation fight on Friday, warning the central bank “has more work to do” to fight inflation, signaling that stubbornly elevated prices could warrant further tightening.
Market review: Volatility fades, markets meander
Stocks meandered towards the end of the summer: US large caps rose, while small and mid-cap stocks pulled back on rate hike fears. International stocks and bond markets held in relatively steady while the market’s ‘fear gauge’, the VIX, hit the lowest level of 2026 – despite Fed uncertainty, high oil prices and escalation in both the middle east and Ukraine conflicts.1
Outlook: Bull markets don’t die of old age
They are murdered, says the aphoris.2 Today, two candidates are a policy error and something that slows US earnings momentum.
Fed Chair Warsh brought rate hikes back into the conversation. Recommitting to price stability is the right long-run discipline, but it narrows the margin for error: tighten too much and the expansion is what gives way.
Earnings look healthy.3 Q2 earnings growth was the best since 2021 and well above expectations. Eighty-six percent of companies beat on earnings and 77% beat on revenues, which grew 15.5%. Ten of eleven sectors grew earnings, all eleven grew revenues, and forward guidance has turned constructive. This wasn’t a handful of megacaps carrying the index, which matters, because broad participation is harder to break than a narrow rally.
What this means for you: the age of this bull market isn’t the primary risk. The risks are a policy path that overshoots and an earnings trend that stalls, and today only the first is uncertain. That argues for discipline rather than prediction – acknowledge the risks bond don’t be paralyzed by them. Stay diversified across asset classes, sectors, and geographies, keep your allocation matched to your spending time horizon, rebalance back to targets rather than chasing last quarter’s leader, and treat volatility as the cost of participation. Good stewardship looks more like consistency than trying to outsmart the market.
OneAscent Navigator Outlook: August 2026
This material is intended to be educational in nature, and not as a recommendation of any particular strategy, approach, product or concept for any particular advisor or client. These materials are not intended as any form of substitute for individualized investment advice. The discussion is general in nature, and therefore not intended to recommend or endorse any asset class, security, or technical aspect of any security for the purpose of allowing a reader to use the approach on their own. Before participating in any investment program or making any investment, clients as well as all other readers are encouraged to consult with their own professional advisers, including investment advisers and tax advisors. OneAscent can assist in determining a suitable investment approach for a given individual, which may or may not closely resemble the strategies outlined herein.4
1) Source: Bloomberg
2) Source: Jim Bianco on X
3) Source: FactSet Earnings Insight
4) Market Returns reference the following indices: Large Cap – S&P 500, Mid Cap Growth – Russell Midcap growth, Mid Cap Value – Russell Midcap Value, Small Cap – Russell 2000, Developed – MSCI EAFE, Emerging – MSCI Emerging Markets, Aggregate – Bloomberg US Aggregate, High Yield – Bloomberg High Yield
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