Research
Check out WTW’s Thinking Ahead Institute’s State of the Industry Survey 2026. This survey dives into understanding whether the investment industry is fit for purpose. The Thinking Ahead Institute also partnered with MSCI for a Global Asset Owner Technology and AI Peer Study. The study explores current and future technology and AI practices among global asset owners, including their relationship to governance, investment models and organizational design.
September 2026 investment market update:
Equity markets were largely driven by the Iran conflict, debate around AI and slightly more hawkish interest-rate messaging in August and early September. The MSCI ACWI was up 2.67% during the month of August. U.S. equities supported global performance with the Russell 3000 returning 2.74% for the month.[1] Within the U.S., we saw that large caps outpaced small caps and that growth outperformed value.[1]
Source: Source: WTW, Factset, as of September 7, 2026
The second estimate of U.S. Q2 GDP growth remained unchanged at 1.5%, although the mix of growth reflected higher consumer spending. Core PCE was slightly above expectations at 0.25% month-over-month and remained at 3.3% year-over-year. Housing, healthcare, and other services are continuing to keep inflation elevated.
Source: Source: WTW, Factset, as of July 31, 2026
Recent data indicated that the U.S. labor market remained firm. Non-farm payrolls increased by 162,000 in August, well above the 65,000 consensus, while unemployment remained at 4.1% and wage growth was steady at 0.3% month-on-month. The S&P Global Composite PMI printed at 56, with the services and manufacturing indices at 56.5 and 53.9, respectively, indicating broad-based expansion.
Source: WTW, Factset, as of July 31, 2026
Tariffs returned to the forefront in late August:
- August 22: The Trump administration imposed 50% tariffs on approximately $20 billion in Canadian goods, including hockey sticks, agricultural products and tongue depressors. These goods comprise approximately 5% of Canada’s annual exports to the U.S.
- August 24: The U.S. announced a 50% tariff on all Canadian automotive and steel imports, effective January 1, 2027.
- August 25: Canada responded with “dollar-for-dollar” 50% tariffs on U.S. imports, targeting steel, dairy, appliances, agricultural equipment, pulp and paper, and electronics. The Canadian tariffs will take effect September 8, 2026.
Something encouraging: Q2 2026 earnings show broad-based strength
Q2 2026 S&P 500 earnings season delivered one of the strongest quarters in recent years. Aggregate index-level earnings per share (EPS) grew by 55.7% year-over-year, though this value was heavily influenced by outsized gains at the largest constituents, including investment-related gains at Alphabet and Amazon. Stripping out these effects, underlying earnings growth was approximately 33%, while the median company delivered 14.5% earnings growth, highlighting broad-based strength.
AI was a defining feature of earnings season. Nineteen core AI companies, including NVIDIA, Alphabet, Microsoft and Meta, generated approximately one-third of total S&P 500 earnings growth during the quarter. Adoption also broadened: 65% of companies discussed AI on earnings calls, and 11% reported measurable productivity benefits. These results provide growing evidence of operational gains and shift the debate toward how quickly those benefits may translate into broader earnings and cash flow growth.
Source: WTW, Factset, as of August 28, 2026
Source: WTW, Factset, as of July 31, 2026
Four major U.S. technology companies - Microsoft, Amazon, Meta and Apple - reported earnings during the last week in July, driving a strong recovery in AI/tech sentiment. However, results showed significant dispersion at the individual stock level. Microsoft and Amazon posted single-day gains of 15-16% on cloud revenue growth that was materially ahead of consensus, with Microsoft recording the largest single-day market capitalization addition in stock market history. Two others declined 6-9% over the week despite outperforming quarterly revenue expectations, as forward guidance disappointed on a combination of supply constraints and capital expenditure concerns.
Something cautionary: Higher U.S. Treasury yields raise refinancing risks
The U.S. Treasury’s increase in longer-dated bond buybacks had an immediate—but short-lived—market impact:
- Policy change: The Treasury raised the maximum amount spent in each buyback transaction from $2 billion to at least $4 billion, focusing on bonds with 10-to-20-year and 20-to-30-year maturities.
- Market reaction: Long-dated bond prices rallied on the announcement, and the 30-year yield fell by as much as 9 basis points as investors interpreted the move as an effort to limit upward pressure on long-term borrowing costs.
- Longer-term risk: The gains were short-lived because the buybacks did not address the scale of U.S. government borrowing. If financed through greater short-term debt issuance, the policy could shift rather than remove risk by increasing refinancing exposure and sensitivity to short-term interest rates.
These developments are flowing through to the yield curve. The two-year yield, which reflects nearer-term expectations for Federal Reserve policy, reached 4.34% on August 31 (a significant increase from 3.47% on December 31, 2025).
The 10-year yield rose from 4.18% on December 31, 2025, to 4.75% at the end of August. Over the same period, the 30-year yield increased from 4.84% to 5.25% and remained above 5% through the first week of September, its highest level since 2007.
Source: WTW Market Dashboard, FRED, as of August 31, 2026
Something curious: Federal Reserve policy signals from Jackson Hole
Federal Reserve Chair Kevin Warsh’s comments at Jackson Hole suggested a greater risk that U.S. interest rates could remain high or rise further. He reaffirmed the Fed's commitment to returning inflation to 2%, argued that underlying inflation had not improved sufficiently, and signaled that further tightening remained an option if inflation fails to decline "clearly and at sufficient speed." He also reiterated his preference for a "quieter Fed" with less forward guidance. The U.S. Treasury yield curve flattened as inflation concerns persisted, and the Fed signaled that further tightening remained possible.
However, much of Warsh’s speech focused on the potential boost to the economy that AI could provide. He previously spoke about the possibility that AI could increase the economy’s efficiency which would, in theory, reduce pressure on the Fed to lift rates.
WTW news
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Thank you for taking the time to read this edition of What to Watch, brought to you by Jon Pliner, global chief investment officer; Jim Neill, managing director; Garrett Goniea, manager; Madison Rugh, senior analyst; and the WTW Investments team.
To discuss what these market developments could mean for your portfolio, contact the WTW Investments team or explore our latest investment research.
Footnote
- WTW Market Dashboard as of August 31, 2026. Return to article
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