Indices
| Index | Close | Change |
|---|---|---|
| Dow | 52,573 | -841 (-1.57%) |
| Nasdaq | 26,333 | -173 (-0.65%) |
| S&P 500 | 7,656 | -62 (-0.80%) |
| MSCI EAFE | 3,239.16 | +45.13 (+1.41%) |
| US 10-Year Yield | 4.975% | +3.99% |
| WTI Crude | $100.05/bbl | +$8.57 (+9.34%) |
Market Recap September 11 - We're Back!
Labor Day is behind us, trading desks are back to full strength, and week one of September wasted no time: Iran and the U.S. traded fire again, inflation data came in hotter than expected, and OpenAI claimed it solved a 200-year-old math problem.
Same as it Ever Was
The U.S. reportedly sank five Iranian oil tankers after an Iranian missile attack on a Navy warship¹. The Houthis hit multiple targets in Saudi Arabia² and keep threatening shipping near the Bab el-Mandeb strait³. Iran via proxies in Iraq struck the Saudi east-west crude pipeline for the second time this year⁴. Crude and yields spiked, equities sank, and NACHO⁵ remains fully in effect.
Inflation and the Fed
The Fed has painted itself into a corner. Wholesale prices rose 0.4% for the month and sit at 5.3% year over year. Retail prices, measured by CPI, rose 0.4% for the month and stand at 3.4% year over year. Both numbers sit well above the Fed's 2% target. The FOMC hands down its rate decision Wednesday, and the CME FedWatch tool now prices an 87.3% chance of a 25 basis point hike, up from 59.4% a week ago.
Artificial Intelligence Breakthrough
OpenAI claims it solved (currently awaiting independent verification) the Navier-Stokes existence and smoothness problem⁶, a 200-year-old math question. However, several OpenAI scientists accused the company of stealing their hypothesis, then throwing the firm's compute resources at testing and solving it before they could, effectively front-running their own work⁷.
Separately, AI agents from OpenAI and Anthropic reportedly broke out of their sandboxes, the isolated environments meant to keep them contained, then reached outside systems, coordinated with each other, and covered their tracks⁸. That reignited the debate over whether AI poses a genuine existential risk⁹.
Ending on a Hopeful Note
When we last wrote, we flagged three things worth watching into year end: meaningful escalation in Iran, the Fed and inflation, and hyperscaler capex.
The Iran war has escalated but an invasion seems improbable at this time. Hyperscaler capex isn't slowing either. Nvidia said on its latest call that hyperscaler spend will grow from $800 billion in 2026 to $1.3 TRILLION in 2027¹⁰. That leaves inflation and rates, which have been the story of September thus far. PCE, PPI, and CPI all show inflation holding well above the Fed's target. Fed Chair Warsh keeps talking tough without acting. With only three FOMC meetings remaining this year, a rate hike is a near certainty this week, and prediction markets already price another one in December. If both land, we think markets react positively rather than negatively, on the belief the Fed is finally taking the inflation situation seriously.
The Week Ahead
- Monday - No reports of note. Earnings: None.
- Tuesday - No reports of note. Earnings: None.
- Wednesday - August Retail Sales, FOMC Interest Rate Decision and Press Conference. Earnings: None.
- Thursday - Initial Jobless Claims. Earnings: None.
- Friday - August Leading Economic Indicators. Earnings: None.
Closing Perspective
We're cautiously optimistic heading into next week. A confirmed rate hike, and a second one signaled for December, would show the Fed is serious about closing the inflation gap, and that alone could calm a market rattled by a volatile September open.
Footnotes
² https://www.bbc.com/news/articles/cp849n2nz01o
³ https://www.npr.org/2026/09/12/g-s1-143044/yemens-houthis-capture-red-sea-island
⁵ NACHO: Not A Chance Hormuz Opens.
⁶ Navier-Stokes existence and smoothness problem: https://en.wikipedia.org/wiki/Navier%E2%80%93Stokes_equations
⁷ https://futurism.com/artificial-intelligence/drama-openai-supposed-mathematical-breakthrough
⁸ https://www.cbsnews.com/news/openai-hugging-face-hack-ai-risks/
⁹ https://www.axios.com/2026/09/09/ai-doom-pdoom-kill-all-humans-anthropic
Disclosure: Contango Wealth Management and/or its principals hold a position in Nvidia (NVDA), the security referenced above.
Disclaimer: this is neither a recommendation to buy or sell any securities mentioned above. Investing involves risk and the potential loss of principal.