Week In Review: The Dentist Said Root Canal. Wall Street Said Finally.

Tuesday, September 8 through Friday September 11. Four sessions, because Monday was Labor Day. Every number is Friday's close against the prior Friday's close.

Had $1,000 in the S&P 500 last Friday? You have $992.34 now. Had it in the small companies of the Russell 2000? $975.95. That gap is about twenty-four dollars, which this week buys you roughly four gallons of diesel.

Last week America found 44,000 jobs it never lost. This week it sat down in the dentist's chair to find out what all that good news was going to cost.

The market was never afraid of a rate hike. It was afraid of not knowing.

If you have ever dreaded a dentist appointment, you understand this week better than most economists do. Stocks fell Tuesday, Wednesday and Thursday, on top of last Friday, four straight losses that took 1.98% off the S&P 500. Nothing had actually broken yet. Everybody was just sitting in the waiting room, flipping through a magazine from 2019, listening to the drill through the wall.

The appointment was Friday at 7:30 a.m. Central, when the Bureau of Labor Statistics released the August consumer price index, or CPI, the government's monthly tally of what a basket of everyday stuff costs. Prices rose 0.4% in the month and 3.4% over the year. Both landed exactly on forecast. Gasoline alone jumped 3.9% in August and made up more than a third of the whole increase, so if you felt it at the pump, congratulations, you are the data.

The number the Fed stares at harder is "core" inflation, which strips out food and energy because they bounce around like a toddler at a birthday party. Core rose 0.3% against 0.2% expected. One tenth of a percent sounds like nothing. To the Fed, it is the difference between "let's keep an eye on that" and "open wide." Thursday had already warmed up the drill: producer prices, what businesses pay before they decide what you pay, were up 5.4% from a year earlier, above the 5.3% expected.

Fed Governor Christopher Waller told everyone in advance exactly what would set him off. On September 3, he said that if August's data showed the recent improvement had been "fleeting," then "it may be appropriate to raise the policy rate." Traders read Friday's core number and decided that it counted. The odds of a quarter-point hike at Wednesday's meeting went from about 72% before the report to about 87% after, according to CME's FedWatch tool, which backs those odds out of futures prices. A week earlier it was a coin flip.

And the stock market rose. The S&P 500 gained 0.85% Friday and the Dow nearly a full percent. The VIX, Wall Street's fear gauge, dropped 11.21% in one session. We said on Tuesday that last week's jobs report was great, which was the problem. On Friday, the market got the confirmation and went home with a lollipop.

The war stopped being background noise this week and started being part of your commute. On Tuesday, US forces destroyed five Iranian oil tankers after Iran's Revolutionary Guard fired ballistic missiles at a US warship, according to US Central Command. Iran fired missiles at a US base in Jordan, and Jordan says it shot down 18 of 20. On Wednesday, Brent, the global oil benchmark, crossed $100 a barrel for the first time since July. On Thursday, Iran-backed Houthi fighters seized the Yemeni port of Mokha, about 50 miles from the Red Sea's southern exit. That exit is the back door Saudi oil uses when the front door at Hormuz is on fire. US crude crossed $100 that day for the first time since May.

The oil fund we track rose 9.12% on the week. Had $1,000 in it last Friday? You have $1,091.15. Diesel hit a record $6.06 a gallon nationally, per AAA, against about $3.70 a year ago. Filling a 150-gallon truck tank went from about $555 to $909, and that extra $354 rides along on every pallet of groceries the truck carries. That is how a missile in the Red Sea ends up in your cereal aisle.

Now the strange part, which we flagged Friday morning. Energy stocks rose just 1.69% on the week, about a fifth as far as the barrel. On Thursday, oil's biggest day since August 10, energy stocks actually fell. That was the first session since at least May when oil rose more than 3%, and the oil companies closed lower. Gold, the classic fear trade, fell 1.97% on the week. Defense stocks fell 2.93%. People who are truly scared of a longer war buy all three. This week the market sold all three and bought barrels.

On Friday, oil gave back 2.20%. Nothing got fixed. It just needed to sit down for a minute.

Oil is a fever, not a new body temperature. The Fed treats fevers anyway.

Treasury sold three big batches of IOUs this week, and each one cost more than the last. The 3-year note paid 4.474%, up from 4.291%. The 10-year paid 4.834%, up from 4.683%, which we covered live on Thursday. The 30-year paid 5.308%, up from 5.216%. When the most reliable borrower on the planet has to sweeten the offer on every loan, lenders are not refusing to lend. They are asking what their dollars will be worth when they get them back.

The yields that trade every day told the same story. The 10-year Treasury yield, the interest rate the whole lending world keys off, rose 18 basis points from last Friday to 4.969% at Thursday's close, its highest close since October 2023. A basis point is one hundredth of a percentage point, so 18 of them in four days is the bond market's version of stress eating. The 30-year closed Thursday at 5.368%, its highest in our data since June 2007, a few weeks before the first iPhone went on sale. Friday's bond quotes came back frozen in our data feed, the same price four times where a real trading day should be, so every yield in this edition is Thursday's clean close.

The bond market does not have feelings. It has math.

On Wednesday, Meta launched Muse, an AI assistant that can shop online, book flights, and run your calendar, with a free tier and paid plans at $20 and $100 a month. The stock rose 6.55% that day and 5.07% over the week. After two years of investors asking what all those data centers are actually for, Meta answered with a price list, which is the most romantic thing a tech company can do for a shareholder.

AMD had the best week of any big tech name we track, up 8.07%, after its finance chief told an investor conference that the AI chip market could reach $2 trillion to $3 trillion by 2030. Wall Street calls that the "total addressable market," which means every dollar anyone could conceivably spend on the thing, and it is a number you can only say out loud with a straight face at an investor conference.

Then there is Oracle, winner of this week's Dud of the Week award. Thursday night, it reported the kind of quarter most companies would frame and hang in the lobby. Adjusted profit came in at $1.92 a share against $1.74 expected. Revenue rose 30% to $19.35 billion. The cloud business that rents out AI computers grew 121%. On Friday, the stock was up 8.53% and hit a high. It closed down 1.74%. From the top of the day to the bottom line, it gave back 9.46%, which is a lot of excitement to end up exactly where you started, only worse. The coverage pointed to the finances: Oracle spent $28 billion on buildings and chips in the quarter and burned through $5 billion more cash than it brought in. Had $1,000 in Oracle last Friday? You have $946.47.

Friday morning, the University of Michigan's consumer sentiment survey, a monthly poll of how regular people feel about their money, came in at 47.8. Forecasters expected 51. It is the second-lowest reading since the survey started in 1952, and the lowest one was this May. People also said they expect prices to rise 4.6% over the next year, up from 4.0% last month and the highest since June.

Two days earlier, Apple held its first launch event under its new CEO, John Ternus, and unveiled the iPhone Duo, its first foldable phone, priced from $1,999 to $3,199. The stock dipped 0.28% on launch day, then rose 3.56% Thursday and 1.75% Friday, finishing the week up 3.84%.

To be clear, we are not saying people are buying a $3,199 phone while telling pollsters they are broke. Nobody has sales numbers yet. We are saying investors are betting that somebody will, which is a different and much funnier sentence.

Feeling terrible and spending anyway is a deeply American combination, like ordering a salad with a milkshake.

Pulled live Friday night, September 11. Real money, real odds, no crystal ball required.

A week ago, the biggest bet on this board called September a coin flip, with "no change" leading at 50% on $96 million. Now $133 million says a quarter-point hike, at 81%. The bettors won’t change their minds so much as get their X-rays back.

The sleeper is further down the board. The market on where the US economy ends in 2026 flipped its favorite. Last week, "soft landing" led at 56%. This week "overheating," defined as unemployment under 5% with inflation at 3.5% or higher, leads at 56%. Same number, opposite diagnosis.

Gold's exchange-traded fund closed Friday at 398.77, down 1.97% for the week. It fell 1.73% on Tuesday, the day the US sank five tankers, and 1.73% again on Thursday, the day Houthi fighters took a port. Gold now has a front-row seat to an actual shooting war and keeps leaving the theater early.

Zoom out, and it is still up 18.89% over twelve months, so grandma's coins are still beating most of the professionals who laugh at grandma's coins.

The reason is the same one running through this whole edition. Gold pays you nothing. The 10-year Treasury paid 4.969% at Thursday's close. When the government will pay you almost 5% to sit still, and the Fed looks ready to raise rates on Wednesday, a shiny rock with zero income has a tough sales pitch. Gold did not fall because the war is fine. It fell because the war keeps pushing interest rates up, and interest rates are gold's least favorite relative.

Freddie Mac's weekly survey put the average 30-year mortgage at 6.76% on Thursday, up from 6.71%. The 15-year moved to 6.09% from 6.04%. On a $400,000 loan, that bump is about $13.29 more a month, or roughly $159 a year, for doing nothing but reading the news.

The Mortgage Bankers Association's index of refinance applications fell 6.2% in a single week. Sales of existing homes slowed in August to an annual pace of 3.98 million, down from 4.06 million, per the National Association of Realtors.

Here is what that means for actual humans. Nobody refinances into a higher rate, and fewer people are buying. The housing market is not crashing. It is sitting in the same waiting room as everybody else, and it has been there so long it knows the receptionist's kids by name.

Our news-tone score for the S&P 500 got gloomier every single day of the week and hit its low on Friday, the one day the index actually went up. Last week the tone peaked on a day the index fell. Two weeks running, the headlines have had the market exactly backward. At some point that stops being a coincidence and starts being a strategy.

Nvidia drew more stories than any other name we track, 204 on Tuesday alone and 190 on Thursday, and fell 5.24%. Attention is not a bid.

The latest positioning report from the futures regulator, the CFTC, shows speculators net short about 75,900 S&P 500 contracts, up from about 68,000 in the prior report. The professionals keep adding to their bet against the index, and the index keeps declining to cooperate. Bitcoin, meanwhile, fell 3.59% to about 76,813, four days before the Senate's big crypto vote. Nobody noticed. There was a root canal on.

Fair warning: you just had dental work, so this week's meal is soup. The appetizer was Tuesday's five sunken tankers, served with a 3-year note that cost more than it did last time. Wednesday's main course was $100 Brent and a pricier 10-year auction, with Meta's $20-a-month robot assistant as the only item on the menu anybody enjoyed. Thursday brought producer prices at 5.4%, a port seizure in Yemen, and a 30-year yield from the 2007 vintage, which nobody ordered. Dessert was Friday's inflation report: exactly as sweet as advertised on top, 0.3% instead of 0.2% underneath. And the market, still numb from the novocaine, ate every bite, finished down 0.77%, and tipped the dentist.

Four sessions, four ways of saying prices are going up: oil, bonds, producer prices and consumer prices.

What changed was the market's posture, not the math. For three days it braced, and bracing looks like losses. On Friday it relaxed, and relaxing looks like a rally. The only new information on Friday was that the bad news was confirmed. That is the most human thing the stock market did all year. Everybody knows someone who feels better the second the doctor says "it's what we thought."

So the question that decides next week is not whether the Fed hikes on Wednesday. The market has already made that appointment. The question is the dot plot, the chart where every Fed official anonymously marks where they think rates are headed. If the dots show one hike and done, that is a filling. If they show a series of hikes, that is braces, and nobody in this market has budgeted for braces.

The market sat in the waiting room for four days, heard the words "root canal," and skipped out the door with a lollipop. On Wednesday, it finds out how many teeth.

One hike is a filling. A series of them is braces.

Markets don't wait, and neither do we. Follow Tracking the Trade for fast takes, the numbers that matter, and the occasional meme that hits a little too close to your portfolio.

Disclaimer: This newsletter is provided for informational, educational, and mildly therapeutic purposes only. It is not investment advice; it is not a recommendation to buy or sell anything, and it is absolutely not dental advice, so please keep flossing no matter what the Fed does. All figures are close-to-close through Friday, September 11, 2026, except Treasury yields, which are Thursday's because Friday's came back frozen. If you make a financial decision based solely on a newsletter built around a root canal, the numbness is legally and spiritually yours. Past performance does not predict future results, and neither does the lollipop.

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