Market recap: Week ended September 4, 2026

Markets rebounded after an early-week sell-off

The major North American stock indexes fell on Monday as rising oil prices and renewed inflation concerns weighed on investor sentiment. Despite the day’s weakness, the benchmark indexes posted solid gains for August. Canada’s TSX fell 0.8% on Monday, but rose nearly 3% over the month, extending its winning streak to five consecutive months. In the U.S., the Dow lost 0.7% on the day to close the month with a 1.3% gain. The S&P 500 slipped 0.3% Monday but added more than 2.5% in the month. The Nasdaq dropped the least on the day, losing just 0.1%. It also performed best of all the indexes in August, gaining more than 3%.

Selling pressure intensified on Tuesday as oil prices climbed higher and government bond yields rose. The TSX declined 1.2%, weighed down by losses in technology, materials and industrial shares. U.S. markets also moved lower, with the Dow falling 0.8%, the S&P 500 dropping 0.7% and the Nasdaq losing 1.0%. Concerns that rising energy costs could add to inflation pressures and complicate the interest-rate outlook weighed on market sentiment.

Markets regained ground on Wednesday as investors stepped back into sectors that had come under pressure earlier in the week. The TSX added 0.7%, supported by advances in financial and materials stocks. On Wall Street, the Dow rose 0.6%, while the S&P 500 and Nasdaq each added roughly 0.5%. Several major semiconductor companies also participated in the rebound, helping lift the tech sector.

Stock markets rallied on Thursday after comments from U.S. Federal Reserve (the Fed) Governor Christopher Waller led investors to scale back expectations for another interest-rate increase. The TSX gained more than 1%, while U.S. markets also advanced sharply. The Dow rose 1.2%, the S&P 500 gained 1.1% and the Nasdaq climbed 1.4%, led by strength in several large technology companies. Nvidia was among the notable gainers after announcing plans to acquire developer platform Hugging Face in a deal valued at US$12.9 billion.

Markets ended the week on a softer note Friday after stronger-than-expected U.S. employment data renewed concerns that the Fed may still raise interest rates later this month. The Dow fell 0.5%, while the S&P 500 and Nasdaq declined 0.4% and 0.3%, respectively. The TSX slipped 0.3%, as losses in the materials sector weighed on performance.

The Bank of Canada left rates unchanged

The Bank of Canada kept its benchmark interest rate at 2.25% on Wednesday, marking its seventh consecutive policy meeting without a rate change. While investors widely expected this decision, their reaction focused on the central bank’s assessment of inflation risks and the outlook for interest rates.

In its policy statement, the central bank pointed to two key sources of uncertainty: higher energy prices tied to the conflict in the Middle East and escalating trade tensions with the United States. While both developments could weigh on economic growth, Governor Tiff Macklem said the outlook for inflation has become more challenging.

“Since our last decision, inflation and growth in Canada have evolved broadly as forecast,” Macklem said. “Against that background we decided to leave the policy rate unchanged. However, the upside risks to inflation have increased, while new tariffs make growth prospects more uncertain.” Macklem added that the governing council will continue to assess the outlook for inflation and is prepared to adjust monetary policy as needed.

The comments struck a more hawkish tone than many investors expected. Following the announcement, financial markets increased their expectations for an interest rate increase later this year.

Canadian economic data took focus

Statistics Canada reported that Canada’s trade surplus narrowed to $769 million in July, down from $4.2 billion in June and below economist expectations. Exports fell 2.3%, largely due to lower shipments of energy products and metals, while imports rose 2.2%. Despite the decline, July marked Canada’s fifth consecutive monthly trade surplus. Trade with the United States also weakened. Exports south of the border fell 6.6% while imports increased 1.8%, reducing Canada’s trade surplus with its largest trading partner to $5.9 billion.

Canada's labour market lost momentum in August after several months of steady improvement. On Friday, Statistics Canada reported a loss of 42,000 jobs, missing expectations for a gain of 15,000 positions. The unemployment rate held steady at 6.4%, while August's decline brought an end to a four-month stretch that saw employment rise by roughly 181,000 jobs. Public-sector employment continued to weaken, although manufacturing added jobs despite ongoing uncertainty surrounding Canada-U.S. trade relations.