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Equities finished mixed last week as investors digested the Federal Reserve’s interest rate increase and the prospect of additional tightening by year-end. For the week, the S&P 500 Index was -0.1%, the Dow Jones Industrials -1.6%, and the NASDAQ +0.9%. The Health Care, Communication Services, and Technology sectors led the S&P 500 Index for the week, while Utilities, Financials, and Real Estate lagged. The 10-year U.S. Treasury note yield was 5.006% at Friday’s close, versus 4.973% the previous week.
In a unanimous vote, the Federal Open Market Committee (FOMC) raised the federal funds rate by 0.25% to a target range of 3.75% to 4.00%. The updated Summary of Economic Projections shows a 2026 year-end target range of 4.00% to 4.25%, implying one additional increase this year, but no further increases in 2027. CME fed funds futures are currently pricing in a 0.25% increase at the October meeting and an additional 0.25% increase at the January meeting which is more aggressive than the FOMC’s current outlook.
This week’s economic calendar is light, but the focus will be on U.S.–China trade as Presidents Trump and Xi meet on Thursday. Topics of discussion will likely include tariffs, artificial intelligence, and global security.
This week, six companies in the S&P 500 Index are scheduled to report third-quarter earnings. Third-quarter earnings are expected to grow by 28.9%, with revenue growth of 11.9%. Full-year 2026 earnings are expected to grow by 31.8%, with revenue growth of 12.1%.
In our Dissecting Headlines section, we review the Federal Reserve’s updated outlook for the U.S. economy.
Financial Market Update
Dissecting Headlines: The Fed’s Outlook
At the conclusion of its policy meeting last week, the Federal Reserve published its updated Summary of Economic Projections. The report presents the individual forecasts of Federal Reserve Board members and Reserve Bank presidents, including their assessments of the appropriate path for monetary policy.
Overall economic growth, as measured by Gross Domestic Product (GDP) is projected at 2.3% for 2026, a touch higher than the Committee’s previous projection of 2.2%. Growth for 2027 is also projected slightly higher at 2.4% versus 2.3% previously. Capital spending on artificial intelligence and other technology initiatives has underpinned growth in recent quarters.
Fed Chairman Kevin Warsh has repeatedly said that employment conditions remain solid. That view is reflected in the updated projection of the unemployment rate for 2026 at 4.1% versus 4.3% previously. The unemployment rate for 2027 is also projected at 4.1% versus 4.3% previously. Employment in skilled trades and other occupations less susceptible to displacement by artificial intelligence has been particularly strong.
Inflation has been the primary area of concern for the Committee, and the decision to raise the federal funds target rate was intended to speed a return to better price stability. The Committee projects inflation, as measured by the Personal Consumption Expenditures (PCE) Price Index at 3.7% in 2026 versus 3.6% previously. Similarly, it sees core PCE, which excludes the impact of food and energy price changes, to be 3.4% for 2026 versus a previous projection of 3.3%. The Committee does see inflation moderating to 2.3% in 2027 and core inflation moderating to 2.5%, followed by further moderation in 2028 and 2029.
Based on this outlook, the median projection of Committee participants sees a total of 0.50% in increases to the fed funds rate for 2026, with no further need for increases in 2027. It also sees the potential for rate reductions in 2028 and 2029, assuming the current policy decisions produce the results the Committee is expecting.
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Want a printable version of this report? Click here: NovaPoint Weekly September 21, 2026
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