Markets opened the week in the green on Monday, shaking off the lingering unease from last week’s historic Federal Reserve rate hike as oil prices notched their fourth straight daily decline. With no major data releases on the calendar, traders turned their attention to a packed slate of economic reports arriving in the days ahead — from flash PMIs to weekly jobless claims, durable goods orders, and the final Michigan consumer sentiment reading for September.
The Fed’s Aftermath: One Hike Down, One to Go
Last Wednesday’s decision still reverberates. The Federal Open Market Committee voted unanimously to raise the federal funds rate by 25 basis points to a target range of 3.75%–4.00% — the first rate increase since 2023 and the first under new Chair Kevin Warsh. The move was widely expected, with markets pricing in better than 90% odds heading into the meeting.
What caught more attention was the updated dot plot. Sixteen of 18 policymakers now project at least one more quarter-point hike before year-end, and the CME FedWatch Tool shows markets pricing roughly 90% odds of that follow-up move materializing. The 10-year Treasury yield surged to a 19-year high in the immediate aftermath, touching levels not seen since 2007, before easing back to 4.95% on Monday as oil’s retreat cooled some of the inflation anxiety.
“The Fed has finally begun its hiking cycle, and the debate now shifts from whether rates will rise again to how many hikes lie ahead,” said Seema Shah, chief global strategist at Principal Asset Management. The question driving markets this week is whether the incoming data supports — or undermines — that tightening path.
The Week Ahead: A Data Deluge
After a quiet Monday, the economic calendar roars to life. Here’s what’s coming:
Wednesday: Flash PMIs (9:45 AM ET)
The S&P Global Flash Manufacturing PMI is expected to edge up to 53.5 from 53.2 in August, while the Flash Services PMI is forecast to dip to 55.9 from 56.8. These are the first broad looks at September economic activity, and any deviation from consensus will set the tone for the rest of the week. A print above 50 signals expansion, and both indexes have held comfortably in growth territory all year.
Thursday: Jobless Claims + New Home Sales (8:30 AM ET)
Initial jobless claims are forecast at 204,000, up from the prior week’s surprisingly low 196,000 reading. Claims have been drifting lower — a 10,000-person decline two weeks ago brought the headline to levels not seen since early 2026 — and economists will be watching to see whether the trend holds as higher interest rates ripple through the labor market. Continuing claims, a gauge of ongoing unemployment, fell to 1.73 million, down 39,000.
Also Thursday: new home sales for August and the Kansas City Fed manufacturing survey (prior: 17). Richmond Fed President Tom Barkin speaks at the Economic Club of Washington, D.C., offering the first post-FOMC comments from a voting member since Wednesday’s decision.
Friday: Durable Goods + Consumer Sentiment
Durable goods orders for August are expected to decline 0.3%, reversing sharply from July’s 1.1% gain. A bigger-than-expected drop would raise questions about business investment momentum heading into the fourth quarter. The University of Michigan’s final September consumer sentiment reading follows at 10:00 AM ET, with the forecast at 47.1 — down from August’s 51.7 and reflecting the weight of high prices, elevated rates, and geopolitical uncertainty on household confidence.
Market Pulse: Oil Retreats, Tech Leads
S&P 500 futures climbed 0.7% in early Monday trading, while Nasdaq 100 futures led with a 1.1% gain, according to Bloomberg. The dollar held steady. Bitcoin touched its highest level since January, crossing above $81,000 and lifting crypto-linked equities in pre-market trading.
The big relief valve: oil. West Texas Intermediate crude slid 2.9% to $93.28 per barrel, its fourth consecutive daily decline. Brent crude dropped to $101.04. The pullback eases one of the Fed’s primary inflation headaches — surging energy costs driven by Middle East supply disruptions have been a key factor keeping headline inflation stubbornly above 3%.
Not everyone is bullish on the bounce. Morgan Stanley’s Mike Wilson warned Monday that U.S. stocks risk a 7% pullback in the near term, citing valuations stretched against the new higher-rate backdrop. The AAII investor sentiment survey, released Friday, showed bullish sentiment plunging to a 16-month low.
Bottom Line
The Fed has laid its cards on the table: at least one more hike in 2026, and rates staying elevated until inflation shows sustained progress toward the 2% target. This week’s data will be the first real test of whether the economy can handle the higher-rate environment — or whether cracks are forming. Flash PMIs on Wednesday are the opening act. If manufacturing slips back toward contraction and services weaken more than expected, the “one more hike” narrative could lose steam fast. Conversely, resilient data keeps the Fed’s hand forced — and keeps pressure on both bonds and equities.
Quiet Mondays don’t stay quiet for long. By Friday’s close, the market’s post-hike trajectory will be a lot clearer.