Market recap: Week ended September 18, 2026

Stock markets navigated inflation concerns and a Fed rate hike

The major North American stock indexes fluctuated last week as investors weighed rising oil prices, stubborn inflation and a U.S. Federal Reserve (the Fed) interest-rate hike.

Canada’s TSX changed little on Monday, edging up 0.01% as gains in energy and technology shares offset weakness in materials stocks. In the U.S., rising bond yields and growing uncertainty surrounding AI-related stocks weighed on sentiment. Investors grew cautious after the U.S. 10-year Treasury yield briefly climbed above 5% for the first time since 2023. The Dow fell 0.29%, while the S&P 500 and Nasdaq declined 0.48% and 0.56%, respectively.

Selling pressure extended into Tuesday as oil prices climbed amid renewed concerns about global energy supplies. Reports of suspended operations at a key Saudi oil export hub raised fears that supply disruptions could persist for weeks. The TSX slipped 0.34%, despite a 3.1% gain in the energy sector. In the U.S., the Dow lost 0.63%, while the S&P 500 fell 0.45% and the Nasdaq dropped 0.78%.

Markets remained volatile on Wednesday following the Fed’s decision to raise interest rates. After trading higher earlier in the session, stocks reversed course when the Fed made the announcement. The U.S. central bank also indicated that further tightening may be needed to control inflation. The TSX fell 0.3%, while the Dow declined 1.21%. The S&P 500 lost 0.44% and the Nasdaq finished little changed, down 0.01%.

Stocks rebounded on Thursday as easing oil prices, lower bond yields and encouraging U.S. labour-market data helped investors look beyond the Fed’s rate hike. The TSX rose 1.1%, led by gains in materials shares as gold prices recovered from a near six-week low. U.S. markets also advanced, with the tech-heavy Nasdaq climbing 1.69%, while the S&P 500 and Dow gained 1.14% and 0.62%, respectively.

Trading was more subdued on Friday as bond yields climbed and oil prices remained elevated. The TSX slipped 0.2%, weighed down by weakness in energy, industrial and consumer staples shares. For the week, the TSX rose 0.3%, snapping a four-week losing streak. On Wall Street, the Dow fell 0.18% on Friday, while the S&P 500 and Nasdaq gained 0.17% and 0.40%, respectively.

Canadian inflation held steady in August

Canada’s inflation rate was unchanged in August, suggesting higher energy costs have not caused widespread price increases across the broader economy.

On Wednesday, Statistics Canada reported that the Consumer Price Index (CPI) rose 3.0% year over year in August, matching July’s increase and aligning with economist expectations. Gasoline prices remained a key driver, rising 22.8% from a year earlier, though growth slowed from July. Excluding gasoline, inflation rose 2.4% year over year.

Some categories showed signs of easing price pressures. Grocery prices rose 2.8% from a year ago, down from 3.1% in July and below the headline inflation rate for the first time since July 2024. While food inflation has moderated, Canadians are still paying 29% more for groceries than they were in August 2021.

On a monthly basis, the CPI fell 0.1% in August, reflecting slower gasoline price growth and easing food inflation.

The Fed raised interest rates and signalled more tightening may follow

The Fed raised its benchmark interest rate by 0.25% on Wednesday, marking its first increase since 2023. The move lifted the federal funds rate to a range of 3.75% to 4.0%.

In its policy statement, the central bank said the rate increase would support a “timelier return” to its 2% inflation target. Policy-makers also signalled that another rate increase remains possible later this year if price pressures persist.

In his post-meeting remarks, Fed Chair Kevin Warsh pointed to the strength of the U.S. economy and labour market, along with stubborn inflation, as factors supporting the decision. “The plain fact is that inflation is too high and has been for too long,” Warsh said.

Canada used an investment summit to attract global capital

More than 100 of the world’s largest investors gathered in Toronto last week for the Canada Investment Summit, a two-day event hosted by the federal government in partnership with CPP Investments and PSP Investments. The attendees, who collectively represented more than $120 trillion in assets under management, joined business leaders and policy-makers to discuss investment opportunities in Canada and strengthen economic ties beyond North America.

Prime Minister Carney said the government aims to attract $1 trillion in new investment over the next five years, focusing on sectors such as infrastructure, energy, technology and critical minerals. “We are launching the investment supercycle that the country needs,” he said.

The government also used the summit to announce a new “productivity mega deduction” that allows businesses to immediately write off a broader range of capital investments. The government also unveiled plans to seek private investment in Canada’s four largest airports during the event.