S&P 500 Posts Modest Weekly Gain Despite Friday Dip Amid Inflation Concerns

By Sean Conlon, Alex Harring, Ananya Chetia, Jeff Cox, Scott Schnipper, Davis Giangiulio, Lee Ying Shan, Spencer Kimball, Justina Lee, Jenni Reid, Sawdah Bhaimiya, Nick Wells, Liz Napolitano

New York | August 28, 2026

The S&P 500 experienced a slight downturn on Friday, yet it managed to secure a positive performance for the entire week. This market movement followed comments from Federal Reserve Chairman Kevin Warsh, who expressed concerns regarding current inflation trends.

The broad market index, the S&P 500, closed down 0.25% at 7,711.76. The Nasdaq Composite also saw a decline, falling 0.52% to 26,402.42. This dip was largely influenced by losses in semiconductor stocks, including prominent names like Nvidia and Intel. The Dow Jones Industrial Average experienced a minimal drop, losing 9.45 points, or 0.02%, to finish at 53,559.99.

Despite Friday's pullback, the S&P 500 concluded the week with a gain of 0.5%. The Nasdaq Composite also posted a gain of 0.9%, while the Dow Jones Industrial Average climbed 0.5%, marking its first winning week in three.

Warsh Highlights Inflation Worries at Jackson Hole

Speaking at the Federal Reserve's annual symposium in Jackson Hole, Wyoming, Chairman Kevin Warsh conveyed his unease about the persistent inflation. "While this summer's PCE and CPI readings were better than expected, they do not tell me that underlying trends have meaningfully improved," Warsh stated.

He emphasized the need for confidence that underlying inflation is moving towards the Fed's objective at a sufficient speed. "Otherwise, we have work to do. That's our job ... our mandate ... and our charge to keep," he added.

Following Warsh's remarks, the probability of the Fed raising interest rates in September increased significantly. Fed funds futures traders placed the odds at 57.5% on Friday, a notable jump from 35.4% the previous day, according to CME Group's FedWatch tool.

Treasury yields reacted to the speech, with short-term yields rising immediately after Warsh's address. Long-term yields remained relatively flat. By the end of the trading day, short-term yields had retreated slightly from their earlier highs.

Bill Birmingham, managing director at REX Financial, described Warsh's speech as a "very strong kind of message, both a message to the market but also just a kind of message in general that the way the Fed has done business for maybe the last 40 years in some ways has not been as rigorous as it could be." Birmingham also noted that Warsh's comments specifically on the composition of CPI suggest he is "very much looking for consensus internally to raise rates."

Key Earnings and Market Movers

Investors also closely watched earnings reports. Gap shares surged approximately 13% despite mixed quarterly results, as the retailer announced a new chief executive for its struggling Old Navy brand. Conversely, Marvell Technology slid over 10% after issuing current-quarter guidance for non-GAAP gross margin that disappointed the market.

Stocks Finish in the Red on Friday

U.S. equities closed lower on Friday. The S&P 500 fell 0.25% to 7,711.76. The Nasdaq Composite declined 0.52% to 26,402.42. The Dow Jones Industrial Average shed just 9.45 points, or 0.02%, to 53,559.99.

Semiconductor Stocks Face Mixed Fortunes

Nvidia's post-earnings rally did not lift the broader semiconductor sector significantly this week. While the chipmaker saw a gain of over 1% for the week, boosted by a nearly 9% jump on Thursday, the VanEck Semiconductor ETF (SMH) slipped more than 3% week-to-date. Marvell Technology and Applied Materials were notable laggards, with respective losses of over 8% and 5% this week. Synopsys and Cadence Design Systems were among the stocks that helped restrict losses, rising over 11% and 6%, respectively.

AI Trade Sustainability in Focus Next Week

Technology stocks saw a significant rebound this week. However, the sustainability of the artificial intelligence (AI) trade, particularly amid growing expectations of a rate hike, remains a key question. The upcoming jobs report will provide further clarity on the Federal Reserve's monetary policy path.

"It's all about artificial intelligence," said Dave Sekera, chief U.S. market strategist at Morningstar. "And I think that's going to continue through next week as well as everyone's trying to reorient where they want to position their AI plays."

Policy Clarity Valued by Investors

Seema Shah, chief global strategist at Principal Asset Management, noted that Federal Reserve Chairman Kevin Warsh's speech provided "a clearer picture for September." She added, "Although we expect incoming data to improve, the risk of a September hike has increased. The positive market reaction highlights that investors place a premium on policy clarity, even when that clarity carries a more hawkish message."

Goolsbee Echoes Inflation Concerns

Chicago Federal Reserve President Austan Goolsbee expressed general agreement with Chairman Warsh's assessment of the U.S. economy, identifying inflation as the primary challenge. "I agree with the analysis that the chairman put forth that we've been above the target. It was going the wrong way. We've gotten a couple of months of more benign readings, but that certainly doesn't feel like out of the woods," Goolsbee stated in a CNBC interview.

Fed Rate Hike Odds Increase

The likelihood of a September rate hike by the Federal Reserve has increased. Odds of a quarter-point rise in fed funds at the September meeting jumped to 57.5%, according to the CME FedWatch tool, up from 35.4% the day prior to Warsh's speech.

Market Movers and Shakers

• Workday shares climbed 6% after reporting second-quarter results that surpassed estimates, with adjusted earnings of $2.75 per share and revenue of $2.65 billion.
• Salesforce continued its post-earnings rally, gaining 3% on Friday. The company beat top and bottom-line estimates in the second quarter and reported a $2.6 billion gain on strategic investments, including its stake in AI startup Anthropic.
• Nvidia shares dropped over 3%, following a nearly 9% rally in the prior session that boosted the S&P 500 and Nasdaq Composite.
• PayPal shares plummeted nearly 16% after reports that buyout firm Advent and Stripe had abandoned their takeover attempt.
• Affirm jumped 13% after reporting fiscal fourth-quarter revenue of $1.17 billion, exceeding estimates, with favorable first-quarter guidance.
• Elastic N.V. gained over 17% as its full-year guidance surpassed analysts' expectations.
• Gap shares rose about 13% following the announcement of a new chief executive for its Old Navy brand and mixed quarterly results.
• Marvell Technology slid more than 10% after issuing disappointing current-quarter guidance for non-GAAP gross margin.

Commodities and Cryptocurrencies

Wheat, corn, and soybeans reached multiyear highs, driven by attacks in the Black Sea and weather concerns. Wheat touched $7.725 a bushel, corn climbed to $5.4125 a bushel, and soybeans reached $12.795 a bushel, marking significant year-to-date gains.

Bitcoin slipped to $79,623.97 after a rapid surge pushed it into "overbought" territory. Oil prices experienced a slight decline as traders monitored Middle Eastern developments.