If you have looked at your investment accounts over the past few days, you may be wondering what is going on.
After a strong year for stocks, the market has recently turned lower. The Dow Jones Industrial Average, S&P 500 and Nasdaq Composite have all declined for three consecutive trading sessions. On Wednesday, September 9, the Dow fell 0.77%, the S&P 500 declined 0.48%, and the Nasdaq dropped 0.64%. Smaller-company stocks have been under even more pressure, with the Russell 2000 falling 1.3% today.
That may sound alarming, particularly if you are approaching retirement or already living in retirement.
But there is an important distinction between a market decline and a change in the long-term investment outlook.
Today’s weakness is being driven by several concerns hitting the market at the same time: higher oil prices, renewed geopolitical tensions, rising interest rates, inflation concerns and uncertainty about the Federal Reserve.
Let’s take a closer look at what is happening — and, more importantly, what it means for investors.
1. Oil has suddenly become a major concern
The biggest immediate issue for financial markets is oil.
Brent crude oil moved above $100 per barrel this week, reaching levels not seen since July. U.S. West Texas Intermediate crude also climbed sharply, closing Wednesday around $96 per barrel.
Why does the price of oil matter so much to the stock market?
Because oil is an input into a surprisingly large portion of the economy.
Higher oil prices can increase the cost of:
- Transportation
- Manufacturing
- Air travel
- Shipping
- Agriculture
- Chemicals
- Plastics
- Consumer products
- Utilities and other energy-intensive businesses
Higher fuel costs can eventually make their way into the prices consumers pay.
That creates a difficult situation for the Federal Reserve.
If inflation is moving higher because of an oil shock, the Fed may have less flexibility to lower interest rates. And if investors had been expecting lower interest rates, that change in expectations can cause stock and bond prices to fall.
This is one reason today’s market decline is not simply about “stocks going down.”
The market is reassessing the potential economic consequences of higher energy prices lasting longer than expected.
2. Geopolitical tensions are adding another layer of uncertainty
The oil spike isn’t happening in isolation.
Escalating tensions involving Iran and the Strait of Hormuz are raising concerns about the security of global oil supplies. Reuters reported that oil prices jumped after attacks involving shipping near the Strait of Hormuz, while tensions in the region continued to intensify.
The Strait of Hormuz is particularly important because a substantial amount of the world’s oil passes through this narrow waterway.
Markets don’t necessarily need an actual shortage of oil to react negatively.
They react to the possibility of a shortage.
Financial markets are forward-looking. Investors are constantly asking:
“What could happen next?”
If investors believe geopolitical events could keep oil prices elevated, they begin adjusting their expectations for inflation, corporate profits and interest rates.
That can cause stocks to fall even before the economic consequences become visible in corporate earnings.
3. Interest rates are going in the wrong direction for stocks
The second major issue is happening in the bond market.
The yield on the 10-year U.S. Treasury note climbed to approximately 4.84% on Wednesday, near its highest level since 2023.
Why does that matter to stock investors?
Because bonds compete with stocks for investors’ money.
Imagine that an investor can earn a relatively attractive return from a U.S. Treasury bond with substantially less risk than owning a stock.
That makes stocks somewhat less attractive at the margin.
Higher interest rates also affect companies themselves.
When borrowing becomes more expensive, companies may:
- Delay expansion
- Pay more interest on debt
- Reduce investment
- Face lower profit margins
- Become less valuable when analysts calculate their future earnings
Higher rates can be particularly painful for growth-oriented companies because much of their perceived value comes from profits expected years into the future.
This is one reason technology and other growth stocks can be particularly sensitive to changes in interest rates.
4. The Treasury’s bond-buyback announcement didn’t solve the problem
There was another interesting development today.
The U.S. Treasury announced plans to buy back approximately $6 billion of longer-term government debt.
The idea was, in part, to help improve liquidity and reduce volatility in the Treasury market.
But investors had apparently hoped for a larger buyback, and the announcement did not produce the calming effect some had anticipated. Treasury yields continued to rise.
This is important because it demonstrates something investors sometimes forget:
The government cannot simply dictate where interest rates should be.
Bond markets are enormous, and yields are ultimately influenced by investors’ expectations about inflation, economic growth, government borrowing, Federal Reserve policy and the supply and demand for Treasury securities.
When investors demand more compensation for owning long-term bonds, yields rise.
And rising long-term yields can put pressure on stocks.
5. Inflation is back in the conversation
For much of the past year, investors have been hoping that inflation would continue moving toward the Federal Reserve’s long-term 2% objective.
Now the market is becoming less certain.
Higher energy prices are one reason.
The concern isn’t necessarily that inflation is about to spiral out of control. Instead, investors are asking whether an oil shock could interrupt the progress that has been made on inflation.
That’s a very different situation.
Suppose inflation was steadily declining and investors expected the Federal Reserve to reduce interest rates.
Now imagine oil suddenly rises 20%, transportation costs increase and businesses begin facing higher input costs.
The Fed has a dilemma.
Should it cut interest rates to support economic growth?
Or should it keep rates higher to prevent an increase in inflation from becoming entrenched?
Markets dislike uncertainty.
And right now, there is more uncertainty than investors would prefer.
6. The Federal Reserve is becoming harder to predict
This brings us to the Federal Reserve.
Investors had been positioning for the possibility of easier monetary policy. But recent developments have complicated that outlook.
According to a Reuters survey reported today, approximately 70% of economists expect the Fed to leave rates unchanged at its September meeting — down from about 90% in August. Markets are increasingly divided over what the Fed will do.
That uncertainty matters.
The Fed has two major responsibilities: maintaining price stability and supporting maximum employment.
Those goals can conflict.
If the economy weakens, investors want lower rates.
If inflation rises, investors may want the Fed to keep rates higher.
And if inflation rises because of higher oil prices while economic growth slows, the Fed faces an especially difficult situation.
This is sometimes called a stagflationary risk — slower growth combined with persistent inflation.
We are not necessarily experiencing classic stagflation today.
But the possibility is one reason investors are nervous.
7. September is often a difficult month for stocks
There is also a seasonal factor.
September has historically been one of the weaker months for the stock market.
That doesn’t mean September causes markets to fall. And historical seasonality is certainly not a reliable short-term forecasting tool.
But after a strong run earlier in the year, investors sometimes use periods like September to rebalance portfolios, take profits or reassess economic expectations.
This year, that seasonal weakness is occurring at the same time as rising oil prices, higher bond yields and geopolitical uncertainty.
That combination can magnify market movements.
8. The market had already had a very good year
Another important point is that today’s decline needs to be put into perspective.
Even after the recent pullback, major U.S. stock indexes remain significantly higher for the year.
As of Wednesday’s close, the S&P 500 was still up approximately 11.6% for 2026, while the Nasdaq was up roughly 13%. The Russell 2000 was up approximately 17.7% for the year despite its recent decline.
In other words, the market isn’t giving back an entire year’s gains.
It is giving back a portion of a very strong advance.
That’s an important distinction.
When markets rise steadily for months, investors can become accustomed to seeing their accounts increase.
A normal pullback can then feel much worse than it actually is.
9. What does this mean for a long-term investor?
This is where I believe investors should resist the temptation to turn a market headline into a portfolio decision.
If your financial plan was built correctly, you shouldn’t need to predict whether the S&P 500 will be higher or lower next Tuesday.
Instead, you should be asking:
Does my portfolio still match my financial plan?
That’s a much better question.
For someone approaching or living in retirement, several things matter more than predicting the next market move.
Your cash-flow needs
If you need money from your portfolio over the next few months or years, you generally don’t want that money dependent on the stock market being higher at exactly the moment you need it.
That’s one reason a properly constructed retirement portfolio typically includes some combination of cash, high-quality bonds and other assets alongside stocks.
Your time horizon
Money you don’t expect to need for many years has a different job.
If you’re investing for a 10-, 15- or 20-year horizon, a temporary decline in stock prices is fundamentally different from a permanent loss.
Historically, markets have experienced many corrections, bear markets and geopolitical shocks.
The difficult part is not avoiding every decline.
It’s remaining invested appropriately through them.
Your risk tolerance
A market decline is also a useful diagnostic tool.
If a 5% or 10% decline causes you to lose sleep or make decisions you later regret, perhaps your portfolio has more risk than you are comfortable carrying.
That’s valuable information.
The answer isn’t necessarily to sell everything.
It may be to revisit your asset allocation and determine whether the amount of stock-market exposure is appropriate.
10. Should investors be selling?
This is the question I hear most often when markets fall.
My answer is:
Don’t make a long-term investment decision solely because the market had a bad week.
Selling after a decline can turn a temporary decline into a permanent loss.
Imagine an investor who sells after stocks fall 10%.
If the market subsequently recovers, that investor now has a second problem: deciding when to get back in.
And that decision is often harder than deciding when to get out.
Markets don’t ring a bell at the bottom.
The strongest market rebounds can occur when the news still looks terrible.
That’s why successful long-term investing is less about predicting individual market moves and more about having a plan that allows you to withstand them.
11. What should investors watch from here?
There are several things I would be watching closely over the next few weeks.
First: oil prices.
If oil stabilizes or falls, some of today’s inflation fears could ease.
If oil remains above $100 for an extended period, investors will become increasingly focused on its impact on inflation and economic growth.
Second: inflation data.
The upcoming Consumer Price Index and Producer Price Index reports will be particularly important because they will provide additional information about whether price pressures are actually accelerating.
Third: Treasury yields.
If long-term interest rates continue moving higher, stocks — particularly high-valuation growth stocks — could remain under pressure.
Fourth: the Federal Reserve.
Investors will be watching not just the Fed’s decision, but also its language regarding inflation, employment and future interest-rate policy.
Fifth: corporate earnings.
Ultimately, stock prices are tied to the ability of companies to generate profits and cash flow.
If corporate earnings remain healthy, the market may be able to absorb higher interest rates and geopolitical uncertainty.
The bottom line
The stock market is slipping today for a reason — actually, for several reasons.
Oil has moved above $100 per barrel.
Geopolitical tensions have increased.
Inflation concerns have returned.
Long-term Treasury yields have climbed.
The Federal Reserve’s next move has become less certain.
And investors are reassessing stock valuations after a strong run earlier in the year.
But none of those facts necessarily mean that a major bear market is beginning.
Markets decline.
That’s part of investing.
The more important question isn’t “How do I avoid every market decline?”
It is:
“Is my financial plan strong enough that I don’t have to?”
For long-term investors, especially those approaching retirement, the goal shouldn’t be to win every week, month or year.
The goal is to build a portfolio that can help you pursue your financial goals while allowing you to sleep at night when markets inevitably become uncomfortable.
Today’s market decline is a reminder of why diversification, appropriate risk, sufficient liquidity and a long-term perspective matter.
Volatility is the price investors pay for the long-term growth potential of the stock market.
And sometimes, the smartest investment decision is not making a dramatic decision at all