Weekend Update & Market Outlook 9/6/26

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The Week in Review

A nearly flat week that was anything but quiet.

Thursday was the best session in almost a month. The Dow gained 624 points (+1.2%), the Nasdaq rose 1.4%, and the S&P climbed 1.1% to 7,747.71 on falling global yields and comments from Fed Governor Chris Waller, who signaled his September vote would hinge on the August inflation data and indicated a preference for holding if disinflation resumed. That pushed hike odds back toward 50% and put the S&P within reach of its record.

Friday erased a chunk of it. August payrolls came in at +162,000 against a consensus of 53,000 — roughly triple. Private payrolls added 127,000 against 45,000 expected; factory jobs added 16,000 against 5,000. The unemployment rate held at 4.1%. Average hourly earnings rose 0.3%, in line.

And critically, July's headline loss of 23,000 jobs was revised up to a gain of 21,000, with June revised higher as well. That detail deserves attention. Four weeks ago the market rallied 3.6% on a report showing the economy shedding jobs, on the theory that a weakening labor market would keep the Fed parked. That report no longer says what it said. The labor market didn't deteriorate — the first print was wrong.

Markets sold off because a resilient labor market removes the Fed's excuse. The dual mandate is maximum employment and price stability; with employment holding up, the committee has room to attack inflation. Treasury yields reversed sharply — they had been falling before the data — with the 10-year touching above 4.80% before settling at 4.77% and the 2-year spiking above 4.41% intraday before closing at 4.37%. Hike odds for the September 15–16 FOMC moved to roughly 60%.

President Trump publicly praised the jobs number and simultaneously threatened trade restrictions against certain countries if the Fed does not cut rates — worth noting as context for how politically charged the September meeting has become.

Underneath the macro, the earnings pattern held for a fifth consecutive week. Broadcom reported Wednesday with AI semiconductor revenue up 221% year-over-year to $16.7 billion, an EPS and revenue beat ($3.32 vs $3.24; $29.59B vs $29.36B), expanding custom-silicon business with OpenAI, Google, Meta and Anthropic, and a raised long-range AI forecast approaching $230 billion. The stock fell more than 6% the next day on a softer current-quarter revenue forecast and questions about supply-chain constraints. It is down roughly 27% from its June high while the S&P is up 12% on the year.

Lululemon was the other side of the story, plunging 19% after cutting guidance again and reporting an 8% decline in Americas sales. Strong aggregate employment, weak discretionary spending — those two things are hard to reconcile, and the reconciliation is probably that the gains are not landing where the discretionary spending happens.

Weekly Market Scorecard — Week Ending September 4, 2026

QQQ and IWM are derived from their underlying indexes, which are exact: Nasdaq Composite 26,402.42 → 26,504.24 (+0.39%); Russell 2000 2,972.37 → 2,974.25 (+0.06%). Other closes: Dow 53,417.21 (-0.27% on the week), VIX 13.95, gold $4,483.90, crude (Oct) $90.96, Bitcoin ~$79,666. Yields: 2-year 4.37%, 10-year 4.77%, 30-year 5.24%.

SPX / SPY

SPX closed at 7,721.21, roughly 80 points below its record. Resistance sits at 7,747 (Thursday's close), then the record zone at 7,799–7,816, then 7,850 and 8,000. Support is 7,700 — and the index is barely above it — then 7,650, then 7,635, then 7,570–7,580, with the 50-day near 7,500. Every major moving average still sits beneath price.

Volatility (VIX)

VIX at 13.95, and this is the number that should make you uncomfortable. It is at the floor of its range going into a CPI print that decides a live Fed meeting. Protection has rarely been cheaper relative to the event risk directly in front of it.

QQQ

Around 722, up roughly 0.4%, with the Nasdaq Composite at 26,504.24. Support at 710, then 700. The AI complex keeps posting extraordinary growth numbers and keeps getting sold on them — Broadcom's 221% AI revenue growth followed by a 6% decline is the cleanest example yet.

IWM

Around 296, essentially flat, with the Russell 2000 at 2,974.25. Small caps remain below 3,000, where they have been since the Jackson Hole repricing. They are the most rate-sensitive corner of the market, so they carry the most leverage to what happens on September 16 — in both directions.

A Note on the Flyagonal

I want to be straight about where the strategy stands. The Flyagonal has been in a drawdown, and I am not going to dress that up. Drawdowns are part of any strategy, but this one has my full attention.

I am actively working on it — testing new concepts and refinements over the next couple of months to understand what has changed in the current environment and how the approach should adapt. That work is underway now.

As findings come out of that research, they will be published directly inside the course at no additional cost to anyone who already owns it. Current students will get the updates as they are ready.

Past performance does not guarantee results. Trading options involves significant risk and is not suitable for all investors.

Next Week's Economic Calendar — September 7 to 11

Monday September 7 — Labor Day. U.S. markets closed. Statistical releases scheduled for Monday move to Tuesday.

Tuesday September 8 — Consumer Credit (Jul), 3:00 PM ET; rescheduled Monday releases.

Wednesday September 9 — Wholesale Inventories and routine weekly data. Quiet ahead of the inflation prints.

Thursday September 10 — Producer Price Index (Aug), 8:30 AM ET; initial jobless claims; Existing Home Sales; Wholesale Trade.

Friday September 11 — Consumer Price Index (Aug), 8:30 AM ET; Michigan Consumer Survey preliminary (Sep).

Key watch: Friday's CPI, with Thursday's PPI as the setup. These are the final two data points before the Federal Reserve decides on September 16, and the Fed's quiet period began September 5 — no official commentary between now and the decision. The market has to price this on data alone.

The Cleveland Fed's inflation nowcast as of September 4 puts headline CPI near 3.38% year-over-year (+0.36% monthly) and core near 2.38% (+0.20% monthly). July printed 3.4% headline and 2.5% core. A core reading that eases toward 2.4% keeps the disinflation argument alive and probably keeps the Fed on hold. A core number that firms, on top of a 162,000 payroll print, makes a hike very difficult to argue against.

Watch the energy component specifically. Crude went from $87 to roughly $91 this week on the Iran conflict, and fuel prices have been rising faster than crude. That flows into headline CPI directly, and headline is what the public and the President react to, even though core is what the committee weights.

Major Earnings This Week

The Q2 cycle is finished and the September-quarter reporters are sparse. It is a genuinely quiet week — the calendar belongs to inflation data, not earnings.

Oracle (ORCL) is the one worth watching, with cloud infrastructure and AI backlog commentary that reads across to the same hyperscaler capex theme that has driven — and lately punished — the semiconductor complex. Adobe (ADBE), Kroger (KR), and a handful of smaller retail and software names round out the week.

Key watch: Oracle, and specifically its remaining performance obligation — the contracted backlog figure. It has become the cleanest single number on whether AI infrastructure demand is still compounding or merely large. Given that Broadcom just posted 221% AI revenue growth and fell 6%, the read-through question is not whether Oracle's backlog is big. It is whether a big number still gets rewarded.

30-Day Market Outlook

Overall bias: Neutral, with an unusually binary setup. The S&P sits at 7,721, roughly 80 points below its record, having gone essentially nowhere across two weeks of violent intraday swings. Everything now hinges on two inflation prints and a Fed meeting inside the next twelve days.

Macro narrative: The setup for September 16 is genuinely binary, and both sides have real support. The hawkish case: core PCE held at 3.3% and did not decline, payrolls came in at triple expectations with prior months revised up, oil is at $91 and feeding headline inflation, and Chair Warsh has said plainly that the Fed's focus should be on prices. The patient case: Waller has signaled a preference for holding if disinflation resumes, core CPI is nowcast near 2.4%, and the consumer is visibly cracking underneath the aggregate — Lululemon down 19%, Walmart flagging six-year-low same-store sales growth.

The equity market's problem is that it is not positioned for either outcome. VIX under 14 with the S&P 80 points off a record says the market expects the Fed to hold and inflation to cooperate. That may well happen. But it is being priced as near-certain rather than as roughly a coin flip, which is what the data actually supports.

The five-week beat-and-sell pattern is the other thing to sit with. Cisco, Applied Materials, Walmart, Nvidia and Marvell, and now Broadcom have all delivered results at or above expectations and been sold. That is not a fundamentals problem — Broadcom grew AI revenue 221%. It is a positioning and valuation problem, and it suggests the market has already paid for the growth it is now receiving.

Primary risk: A firm August core CPI on Friday. With a 162,000 payroll print already in hand and no Fed commentary available to soften it, a hot core number moves September from a coin flip to a near-certainty, sends the 10-year through 4.80%, and hits a market carrying VIX at 13.95 with essentially no hedge.

Secondary risk: Energy. Crude at $91 and rising on the Iran conflict feeds headline inflation regardless of what core does, and it does so on a lag — meaning even a benign August print does not remove the problem from September and October data.

What would change the picture: A soft core CPI near or below the 2.38% nowcast. That would give the Fed cover to hold despite the jobs number, pull the long end back down, and most benefit the two groups that have been punished hardest — small caps and the AI complex.