Fed hiked rates, yields hit 5%, oil stayed over $100, shoppers spent big, and Buffett left Berkshire’s chair. Five shocks hit markets in five days and they still pretended this was a normal September. The Dow took the bruise. The Nasdaq finished the week higher, which is the market’s version of showing up to a funeral in sneakers. If the economy keeps spending and the bond market keeps raising the cost of money, that odd split may last a little longer than anyone on either side of it would like.
Since last Friday’s close the S&P 500 lost 7 points ending the week essentially unchanged, the NASDAQ advanced 190 points or .72% while the DOW slid 890 points or 1.69%.
Fed Delivers First Rate Hike
On Wednesday the Federal Reserve raised its policy rate a quarter point to a range of 3.75% to 4%, as the Fed delivers the first rate hike since 2023 and the first real tightening under Chair Kevin Warsh. The vote was unanimous, which is central-bank speak for “we are not kidding.” Officials lifted their inflation outlook and most of the committee now sees at least one more hike before year-end. Traders had priced the move, then immediately started arguing about October. That is the Fed’s party trick: deliver the expected news and still leave the room louder than it found it. Price stability, Warsh keeps saying, will arrive on a timetable the data actually supports.
Treasury Yields Cross Five
The 10-year Treasury yield climbed back through 5% this week, a round number that makes mortgage shoppers wince and equity desks quietly recalculate. Higher yields raise the cost of everything from federal borrowing to the next warehouse of AI servers. By Friday the benchmark was sitting near 5% again, and the Dow was closing its worst week since March even as the Nasdaq eked out a gain. Bonds do not slam doors. They just make every other asset pay rent. With markets now giving a second hike in October a better-than-even chance, that 5% handle is less a curiosity and more a working assumption.
Expensive Oil Keeps Inflation Hot
Crude spent the week parked above $100 a barrel while Saudi Arabia and Yemen’s Iran-backed Houthis traded strikes and traders watched the usual choke points. West Texas Intermediate finished higher even as Friday prices chopped around. Diesel at the pump is already the kind of number that makes a road trip feel like a luxury good. Expensive oil is the guest who arrives early, eats the snacks, and refuses to leave the inflation party. That backdrop is one reason the Fed felt comfortable hiking and why another move this fall no longer sounds like a stretch. Energy is doing the central bank’s talking for it.
Five Shocks Hit Markets, Shoppers Keep Spending Anyway
Hours before the Fed spoke, August US retail sales jumped 1.2% to $773.9 billion, beating the 0.8% forecast and reversing July’s slump. Control-group sales, the cleaner read on demand, rose 1.4%. Americans bought cars, clicked “add to cart,” and still found a table at restaurants as five shocks hit markets. That is cheerful for growth and awkward for anyone hoping the Fed would pause. Strong spending says the economy can absorb tighter money. It also hands policymakers another reason to keep the punch bowl on a high shelf. Consumers, bless them, keep proving they will shop through almost anything except an empty cart.
Warren Buffett 96 Stepped Down
Friday brought news that once would have frozen a trading floor. Warren Buffett, 96, stepped down as Berkshire Hathaway chairman, becoming chairman emeritus while his son Howard takes the board gavel. Greg Abel stays CEO. Buffett wrote that “Father Time always wins,” which is both a punch line and a succession plan. Markets, being markets, barely blinked. Berkshire shares drifted. After six decades, the Oracle of Omaha closed the last formal chapter, and Wall Street treated it like a well-rehearsed footnote. That shrug may be the nicest review a handover can get.
Rates, oil, and shoppers still run the show. The Nasdaq found a bounce. The Dow did not. Next week brings a Trump-Xi meeting, because September apparently has a sense of humor.
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