Market Update: August 2026
Prepared by the Investment Committee at Rigden Capital Strategies
Executive Summary
As we move through the third quarter, financial markets continue to navigate a mixed environment. Headline volatility remains elevated, while underlying economic data continues to point to moderate economic growth.
To help put current market movements in context, below are four key economic challenges we are monitoring, four structural positives we see in the current environment, and our perspective on what these developments may mean for investors.
The 4 Key Economic Challenges We Are Tracking
1. Energy Volatility and Middle East Friction
Conflict and shipping disruptions in the Middle East continue to create uncertainty in crude oil and energy markets. Higher energy prices can increase costs for consumers and businesses, reduce household discretionary spending, and contribute to volatility in headline inflation.
In our view, energy-market volatility remains one of the more significant external risks to the near-term economic outlook. The ultimate economic impact will depend on the duration and severity of disruptions, changes in global supply, and how energy prices flow through to consumers and businesses.
2. Sticky Core Inflation
While overall inflation has cooled considerably from its recent peaks, progress toward the Federal Reserve's long-term inflation objective has been uneven.
Recent inflation data continues to show areas of persistence, particularly in shelter and certain service categories. This makes the Federal Reserve's path more complicated and reinforces the importance of evaluating multiple inflation measures rather than focusing on any single monthly report.
The direction of inflation remains particularly important because it can influence interest rates, consumer purchasing power, business investment, and financial-market valuations.
3. Selective Consumer Pullback and Labor Moderation
Consumers are becoming more selective with their spending following several years of elevated borrowing costs and higher prices.
At the same time, the labor market has moderated from the unusually tight conditions experienced earlier in the economic cycle. We are watching payroll growth, unemployment, wage growth, job openings, and consumer spending for signs of whether this moderation represents a normalization of economic conditions or the beginning of a more meaningful slowdown.
A gradual cooling in the labor market could help reduce inflationary pressures. A sharper deterioration, however, could negatively affect consumer spending and broader economic growth.
4. Heavy Concentration in Equity Indices
A relatively small group of large companies continues to represent a significant portion of major market-cap-weighted U.S. equity indexes.
This concentration means investors holding broad market-cap-weighted index funds may have greater exposure to a relatively small number of companies and sectors than they realize. As a result, benchmark performance can be increasingly influenced by the earnings, valuations, and investor sentiment surrounding those companies.
Diversification does not eliminate investment risk, but concentration is an important factor to consider when evaluating an overall portfolio.
Where appropriate based on a client's objectives, time horizon, risk tolerance, income needs, tax considerations, and overall financial plan, portfolio adjustments may include rebalancing away from positions or market segments that have become overweight and increasing exposure to other areas of the market.
For some retired or retirement-focused clients, this may include dividend-oriented or other income-focused equity strategies. We continue to believe technology and other growth-oriented companies can play an important role in a diversified portfolio, but we also believe it is prudent to evaluate how increasing index concentration affects each client's overall risk exposure.
Dividend-paying stocks and other equity strategies remain subject to market risk, and dividends are not guaranteed. These approaches are not appropriate for every investor.
The 4 Biggest Economic Positives
1. Federal Reserve Policy Stability
Greater stability in monetary policy can reduce some of the uncertainty facing businesses, consumers, and investors.
While future Federal Reserve decisions will depend on incoming inflation, employment, and economic-growth data, a more stable interest-rate environment can make borrowing costs and financial planning somewhat more predictable for households and businesses.
We continue to monitor inflation and employment data closely for indications of how Federal Reserve policy may evolve through the remainder of the year.
2. Corporate Earnings and Credit Health
Recent corporate earnings have provided evidence of continued economic resilience across portions of the U.S. economy.
Major financial institutions have generally continued to report healthy business activity and balance sheets. Measures such as loan-loss provisions, non-accrual loans, and net charge-offs are particularly important indicators we monitor for signs of deterioration in credit conditions.
These measures have not, in our view, indicated broad-based deterioration in bank credit conditions to date. However, credit conditions can change, and pockets of stress remain possible across individual borrowers, industries, commercial real estate, consumer lending, and private credit markets.
3. Persistent Infrastructure and Technology Capital Spending
Capital investment in data infrastructure, power generation and transmission, semiconductor capacity, and enterprise technology remains an important source of economic activity. Investment related to artificial intelligence has been particularly significant as companies spend on computing infrastructure, memory, networking equipment, data centers, and energy capacity.
This spending represents real economic demand and may help support portions of the economy even as some consumer categories moderate. However, the ultimate return on these investments remains uncertain. Elevated capital spending does not necessarily translate into higher future corporate earnings or investment returns, and expectations surrounding artificial intelligence remain an important source of both opportunity and risk for investors.
4. Ongoing Economic Expansion
The broader U.S. economy continues to expand, although at a more moderate pace than during some earlier periods. Slower but positive economic growth would be consistent with an economy adjusting to higher borrowing costs rather than necessarily entering a contraction. The sustainability of that expansion will depend on several factors, including employment, consumer spending, inflation, business investment, fiscal policy, credit conditions, and geopolitical developments.
Market & Economic Outlook: Where We May Be Headed
Economic Path: Continued Moderate Expansion
Our current base-case expectation for the remainder of 2026 is continued moderate economic expansion. This is an outlook—not a prediction. The range of potential economic outcomes remains wide, and changes in employment, inflation, energy prices, geopolitical conditions, fiscal policy, credit conditions, or consumer spending could materially alter the path of the economy.
We currently view continued expansion as a more likely near-term scenario than recession, but recession remains a meaningful risk and cannot be ruled out. Rather than attempting to forecast the economy with precision, we believe investors are better served by preparing portfolios for a range of potential outcomes.
Equity and Bond Markets: Volatility With Potential Opportunities
Equities
Because of the significant concentration within major market-cap-weighted benchmarks, index-level returns may remain sensitive to developments among the largest companies.
Periods of changing market leadership may increase the relative attractiveness of other areas of the equity market, including dividend-oriented, mid-cap, international, and value-oriented equities.
These areas carry their own risks and may underperform broader market indexes for extended periods. Diversification also does not ensure a profit or protect against investment losses.
Our focus is therefore not on predicting which market segment will perform best next, but on maintaining allocations that are appropriate for each client's financial plan and risk profile.
Fixed Income
Fixed-income yields remain elevated relative to much of the post-financial-crisis period, potentially providing investors with more income than was available during many recent years.
For appropriate clients, we continue to evaluate relatively shorter-duration fixed-income exposure as one way to manage interest-rate sensitivity while seeking portfolio income.
Shorter-duration securities can generally be less sensitive to changes in interest rates than longer-duration bonds, but they are not risk-free. Fixed-income investments remain subject to interest-rate, credit, inflation, liquidity, and reinvestment risk and can lose value.
What This Means for Your Portfolio
Rather than attempting to time short-term market movements, our investment-management process focuses on diversification, risk management, and alignment with each client's financial plan.
Rebalancing: Where appropriate, trimming positions or asset classes that have become overweight relative to a client's target allocation and reallocating toward underweight areas of the portfolio.
Income Planning: Evaluating available fixed-income yields, dividends, cash reserves, and other sources of portfolio income in the context of a client's cash-flow and liquidity needs while remaining mindful of the risks associated with each investment.
Diversification: Evaluating whether market appreciation has unintentionally increased exposure to particular companies, sectors, investment styles, or asset classes.
Personal Plan Focus: Aligning investment decisions with long-term financial objectives, anticipated cash-flow needs, time horizon, tax considerations, and tolerance for risk.
The appropriate strategy will differ from one investor to another. Portfolio decisions should be based on an investor's complete financial circumstances rather than a short-term market forecast.
Key Indicators We Are Watching
Federal Reserve Decisions: How the Federal Open Market Committee evaluates inflation, employment, and economic-growth data as it considers future monetary policy.
Labor Market: Payroll growth, unemployment, wage trends, job openings, and other indicators that may help distinguish gradual normalization from a more significant slowdown.
Energy Costs: Changes in global crude oil prices, energy supply, and Middle East shipping and geopolitical conditions.
Inflation: Trends in consumer prices, producer prices, shelter costs, services inflation, and the Federal Reserve's preferred inflation measures.
Corporate Earnings and Credit: Earnings growth, margins, loan-loss provisions, charge-offs, and other measures of corporate and household financial health.
Capital Investment: Whether significant corporate spending on artificial intelligence, data infrastructure, energy, and technology ultimately translates into sustainable revenue and earnings growth.
The Bottom Line
There are meaningful risks in today's market, including geopolitical uncertainty, inflation, changing interest rates, equity-market concentration, and a moderating labor market. At the same time, the economy continues to show areas of resilience through business investment, corporate activity, and continued economic expansion.
Our investment approach does not depend on correctly predicting the next economic report, Federal Reserve decision, or market move. Instead, we believe the appropriate response is to maintain diversified portfolios, regularly rebalance where appropriate, manage liquidity and risk, and keep investment decisions connected to each client's broader financial plan. Market conditions will change. A well-constructed financial plan should be designed with that reality in mind.
About Rigden Capital Strategies
Rigden Capital Strategies was founded on a simple belief: financial advice should be personal, transparent, and centered around your goals—not built on generic models or product-driven sales. With decades of combined industry experience, we’ve developed a process grounded in three core values: value, integrity, and progress.
As a fee-only fiduciary, we provide personalized, goals-based wealth planning services designed to adapt with your life. Our services include investment management, retirement and tax planning, and estate coordination. We use a mix of active and passive strategies to help clients navigate market changes with clarity and confidence.
We believe in building real relationships and delivering clear, actionable strategies—focused on long-term planning and aligned with your objectives.
Your goals, our strategies. Together, let’s make your goals happen.
Disclosure
This material is provided by Rigden Capital Strategies for informational and educational purposes only and does not constitute personalized investment, financial, legal, or tax advice or a recommendation to buy, sell, or hold any security or investment strategy.
The opinions and views expressed are those of Rigden Capital Strategies as of the date of publication, are based on information available at that time, and may change without notice.
Market, economic, and company information is obtained from sources believed to be reliable. Rigden Capital Strategies has not independently verified all information and does not guarantee its accuracy or completeness. Economic data may also be revised after its initial publication.
The discussion is based on selected economic data, market information, and company reports and may not be representative of every company, financial institution, industry, consumer, investment, or market environment.
Any discussion of portfolio positioning, asset allocation, rebalancing, or investment strategies is illustrative and does not describe the portfolio of every Rigden Capital Strategies client. Client portfolios vary based on individual objectives, financial circumstances, risk tolerance, time horizon, liquidity needs, tax considerations, investment restrictions, and other factors.
References to specific companies, securities, industries, market segments, or investment themes are provided solely to illustrate broader market and economic developments. They should not be interpreted as an indication that Rigden Capital Strategies has recommended, purchased, sold, or will recommend any particular security.
Rigden Capital Strategies and its clients may hold positions in securities, companies, industries, or investment strategies discussed in this commentary.
Economic forecasts, market outlooks, and other forward-looking statements are inherently uncertain and should not be relied upon as predictions of future events, market performance, or investment results. Actual events and results may differ materially from expectations because of changes in economic conditions, interest rates, inflation, regulations, fiscal policy, technology, consumer behavior, competition, geopolitical events, company execution, and other factors.
Past performance is not indicative of future results. All investments involve risk, including the possible loss of principal. Diversification and asset allocation do not guarantee a profit or protect against loss. No investment strategy can guarantee a profit or protect against loss in every market environment.
Investment decisions should be based on an investor's individual objectives, financial circumstances, time horizon, liquidity needs, tax considerations, and tolerance for risk.