Oakstreet Aug '26 Market Review | Fear is a Liar
David Eck

Fear is a Liar

Well, it happened as it always does.  Summer came and went.  It's bittersweet for me when summer passes (because I look forward to it so much during the darkness of winter), but I also love the feel and smell of fall.  
 
If you've taken the time to read these monthly emails of mine, you might get the false idea that I'm a market pessimist, but that couldn't be further from the truth.  I have a deep conviction in equity markets (stocks, businesses, companies, etc.) because they beautifully reflect God's image in humanity.  Markets reveal His creative and productive nature.
 
Still, my primary job as an advisor is to ensure that my clients never get surprised.  We’re likely to have a perfectly normal, once-every-five-years "bear market.”  A bear market is a minimum 20% temporary drawdown in the index.  Nobody knows when it will happen, and successful investors will simply persevere through it.  
 
What inspired me to write this month’s newsletter was a shirt I saw my high school daughter wearing that reads, “Fear is a liar.”
 
Having lived for five and a half decades and having been gripped by it many times, I know a thing or two about fear.  Like the lie our first parents fell for, fear’s trap is that there’s some truth to its message, which is why it's so believable.  
 
I vividly remember the dread I and many others felt during what is now called the Great Financial Crisis (GFC), from mid-2007 to the spring of 2009.  It felt as if it would only get worse and never end.  Things were bad.  Jobs were lost, houses were sold at auctions, and the market fell almost 57%!  This is the truth.  It really happened.
 
But remember that fear is a liar.  It said, " Look at all the truth. We’re doomed. The end of the world is at hand!”  Fear, acting in its nature, didn't tell the whole story about God's immutable nature expressed in humanity and His plan for victory.  
 
Since the S&P 500 hit its bottom in March of 2009, the index has risen more than 11 times over 17 years!
 
I know perfectly well that true victory isn't measured by market returns, and that the cultural returns may feel tepid, but that's not the point of this newsletter.  (Still, I have many examples of cultural advancements. Here's one.”)
 
👉🏻 The point is that I don't want you to be surprised when the market downturn happens, to persevere, and to remember that in all things, fear is a liar!
 

And now, on to the review of August's financial report...

August delivered a mixed economic picture: inflation remained above the Federal Reserve’s target, bond yields stayed high, and oil prices moved sharply amid geopolitical developments. At the same time, softer retail and housing data suggested consumers and the broader economy were becoming more cautious.

The economy did not appear to be breaking down, but it continued to operate unevenly. Services held up relatively well while manufacturing weakened noticeably. Combined with a low-hiring, low-layoff labor market and stubborn inflation, that split outlook left investors and policymakers with difficult questions about growth, interest rates, and the path ahead.

For individuals and families focused on long-term financial stewardship, months like August are a reminder that short-term headlines should be viewed in the context of a disciplined, values-based investment strategy.

Major U.S. Stock Indexes

U.S. equities remained close to record levels in August. Technology companies and businesses connected to artificial intelligence continued to lead the market, even as some economic reports pointed to slower momentum beneath the surface. Strong late-month results from Nvidia helped ease concerns that spending on AI infrastructure was beginning to lose steam.

What Shaped August’s Results

Hiring cooled without a broad labor-market breakdown. July job growth came in well below expectations, while revisions to earlier reports made prior hiring appear weaker than originally reported. Those figures reinforced signs that employers are becoming more deliberate about adding workers.

Still, the labor market was not in free fall. The unemployment rate declined to 4.1%, in part because fewer people were seeking work, and layoffs remained limited. This low-hire, low-fire environment complicates the outlook: employment is slowing, but widespread job losses have not emerged.

Consumers became more careful with spending. Retail sales reports released in August showed a 0.6% decline for July, the largest monthly drop in more than a year. Walmart, Home Depot, and other major retailers also described a shopper who is weighing purchases more carefully.

For investors, the health of the consumer remains an important part of the economic outlook. Employment conditions, wage growth after inflation, and seasonal sales expectations will offer useful signals about whether households are maintaining spending or pulling back further.

Housing remained under pressure. Higher mortgage rates continued to limit homebuying and construction activity. New housing construction and sales stayed near some of their weakest readings in years, while home prices continued to soften.

An increase in building permits provided one encouraging data point, but borrowing costs remained elevated enough to constrain broader housing activity. Of the major economic sectors, housing continues to show most clearly how higher rates affect everyday financial choices.

Inflation remained the Federal Reserve’s central concern. The Fed’s preferred inflation measure showed limited progress in August. That kept the possibility of another rate increase in view, even as hiring lost momentum and the conflict with Iran remained an important factor in inflation discussions.

Several policymakers had already signaled support for higher rates, and Chair Kevin Warsh’s comments late in the month underscored that controlling inflation remained more urgent than supporting growth. Markets responded by increasing the perceived likelihood of a September policy move.

What to Watch Next

September employment and inflation reports will provide a clearer view of how the economy is progressing as the third quarter nears its end. Continued high borrowing costs may pose the more meaningful risk to growth, particularly if they keep weighing on housing and place added pressure on growth-oriented stock valuations.

Nvidia’s results indicated that AI infrastructure investment remains strong. The next question is whether the related earnings and cash-flow opportunity expands beyond a small group of market leaders into software, industrials, utilities, networking, and power infrastructure—or remains concentrated among only a few companies.

Maintaining Perspective Through Market Changes

Market performance and economic reports can shift quickly from month to month. Oakstreet Financial believes a sound plan should help clients remain grounded through both encouraging market gains and periods of uncertainty. That means connecting investment decisions to long-term goals rather than reacting to every data release or policy headline.

As Christian financial advisors serving families nationwide from the Spokane–Coeur d’Alene region, we believe financial stewardship involves more than following market benchmarks. It includes considering whether a financial plan, retirement strategy, and investment approach reflect the values and purpose most important to the people we serve.

Oakstreet Financial’s fee-only fiduciary approach is designed to bring clarity to those decisions. Through faith-driven financial planning, investment management, and Biblically Responsible Investing, we help clients consider the market environment within a broader, purpose-driven framework.

If August’s developments raise questions about your portfolio or long-term plan, Oakstreet Financial is here to help you make sense of the changing landscape and keep your financial decisions aligned with your goals and values.

 

- David Eck