404.445.7885
The impact of strong corporate earnings was slightly offset by hawkish comments from Federal Reserve Chairman Kevin Warsh, leaving equity markets with a small advance last week. For the week, the S&P 500 Index was +0.5%, the Dow Jones Industrials +0.6%, and the NASDAQ +0.4%. The Technology, Communication Services, and Financial sectors led the S&P 500 Index for the week, while the Energy, Health Care, and Industrial sectors lagged. The 10-year U.S. Treasury note yield was 4.726% at Friday’s close versus 4.734% the previous week.
Chairman Warsh spoke at the Federal Reserve’s Jackson Hole Economic Policy Symposium last week. He said both the economy and labor market are healthy, allowing the Fed to focus on inflation. Warsh reiterated the Fed’s 2% inflation goal and said that setting short-term interest rates will be the Fed’s main policy tool. That made the message clear that unless inflation recedes that the Fed would seek to increase rates to lower inflation. CME Fed funds futures currently show a 0.25% increase at the September Federal Open Market Committee meeting. We will get more information on the labor market later this week when the August Employment Situation report is released.
Earnings reports are at the tail-end for the quarter with 97% of S&P 500 Index companies reported. This week nine companies in the S&P 500 are scheduled to report. Second quarter earnings are expected to grow by 52.0%, with revenue growth of 15.5%. Full-year 2026 earnings are expected to grow by 31.2%, with revenue growth of 11.9%.
In our Dissecting Headlines section, we look at the Venezuelan oil announcement and U.S. Strategic Petroleum Reserve.
Financial Market Update
Dissecting Headlines: Strategic Petroleum
The U.S. announced an agreement with Venezuela to secure development rights over 17 oil fields with approximately 65 billion barrels of recoverable reserves. This is heavy crude oil that can be refined on the U.S Gulf Coast.
Extracting the oil would require substantial investment as Venezuela’s output had been curtailed and infrastructure neglected under the Maduro regime. Several U.S. companies to include Chevron, Exxon Mobil, ConocoPhillips, Halliburton, and Hunt Oil were mentioned as working with Venezuela’s state-owned oil company (PDVSA) on the development. The agreement doesn’t add any immediate physical supply but does create potential long-term reserves that can be extracted.
An increase in petroleum production, whether from Venezuela or domestically, is needed to replenish the U.S. Strategic Petroleum Reserve (SPR). At the end of 2021, the SPR held 594 million barrels but then was drawn down to 372 million barrels by the end of 2022 from emergency releases meant to stabilize oil markets at the outset of the Russian-Ukraine war. Stocks were further drawn down to 355 million barrels by the end of 2023 before a partial replenishment up to 413 million barrels by the end of 2025. The U.S.-Iran conflict and traffic restrictions in the Strait of Hormuz in 2026 resulted in another drawdown to the current level of 290 million barrels.
There is no legally mandated minimum level for the SPR, but the stated capacity is 680 million barrels. It was created in response to the 1973-74 oil embargo and during a time when the U.S. was more heavily reliant on imported oil. Its purpose was to buffer physical supply interruptions.
While the Venezuelan agreement won’t have any immediate solution for a depleted SPR, a secure supply arrangement could bring Venezuela back to its late 1990’s status when it supplied 17% of U.S. oil imports.
________________________________________
Want a printable version of this report? Click here: NovaPoint Weekly August 31, 2026
To learn more about these topics and our investment strategies, call us at 404-445-7885 or contact us here.
Do you understand your personal investment risk tolerance and the risk of your current portfolio? You can learn these by taking our Risk Analysis Questionnaire.