Key Highlights

  • The Nasdaq closed at a record on September 22, 2026, despite the Fed's rate hike earlier in the month.
  • The S&P 500 sat within 0.2 percent of its August high on the same day.
  • Falling oil prices eased cost pressure across the market, supporting the rally.
  • Consensus estimates pointed to a third consecutive quarter of strong profit growth heading into Q3 Earnings season.

New Highs Despite Higher Rates

The Nasdaq closed at a record level on September 22, 2026, while the S&P 500 finished the same session within 0.2 percent of its August high, a notable outcome given that both indexes were absorbing the Federal Reserve's rate hike from earlier the same month. The ability of major indexes to reach or approach fresh highs so soon after a rate increase reflected offsetting factors that helped counterbalance the higher-rate headwind.

Falling Oil as a Tailwind

A retreat in oil prices over the same period helped ease cost pressure across the broader market, offsetting some of the negative impact that higher interest rates typically have on Equity valuations. Lower energy costs feed through to both consumer spending power and corporate input costs, giving the market a tangible offsetting tailwind even as the Fed's policy rate moved higher.

A Strong Earnings Outlook Ahead

Beyond the near-term price action, consensus estimates heading into the period pointed to a third consecutive quarter of strong corporate profit growth, providing a fundamental underpinning for the rally beyond simple relief that the rate hike had been fully priced in ahead of time. That earnings outlook, combined with the easing in oil prices, gave investors a combination of improving fundamentals and reduced cost pressure to lean on even as the higher-rate environment persisted.

Where Things Stand

The Nasdaq and S&P 500's ability to reach or approach record levels so soon after the Fed's rate hike reflects a combination of falling oil prices easing cost pressure and a strong earnings outlook heading into the next reporting season. Whether the rally can extend further will likely depend on Q3 results actually meeting the elevated growth expectations now built into consensus estimates.