Geopolitics Dominate, Putting Rally on Pause Early

Published as of: September 22, 2026, 9:11 a.m. ET

(Tuesday market open) Stocks paused this morning after yesterday's brisk rally, though oil prices continued their retreat and Treasury yields slid. Geopolitics dominates the scene ahead of President Trump's meeting with Chinese President Xi later this week and hopes for Middle East progress as Trump talks to Gulf leaders today at the United Nations General Assembly.

"This week is shaping up as one of the most consequential foreign policy weeks of Trump's presidency," said Michael Townsend, managing director, legislative and regulatory affairs at Schwab. Meanwhile, a trio of Federal Reserve members speak later, including New York Fed President John Williams, Fed Vice Chair Philip Jefferson and Richmond Fed President Tom Barkin. Any could shed light on last week's rate hike. Williams' words often move markets.

On Monday, the Nasdaq gained more than 2% to close at a record high, as falling oil prices and Treasury yields cleared a path for AI-related tech stocks. Meta (META) surged more than 11%, fueled by a positive early response to its new Muse AI agent. That helped Intel (INTC) gain 12%, while Advanced Micro Devices (AMD) rose nearly 10% to reach a $1 trillion market cap. WTI crude oil slipped more than 4% on hopes for talks between the U.S. and Iran and fell further today as Reuters reported that Iran could reopen the Strait of Hormuz if the U.S. lifts its blockade.

1. Dead zone keeps oil and yields in focus: The stock market is in between earnings seasons and coming off both inflation data and a Fed rate hike, so there's little on the calendar in the near term that would be expected to unleash any volatility. That leaves geopolitics—especially oil prices and their impact on Treasury yields—in focus, with market leadership alternating back and forth between energy and tech names. Absent other catalysts, that type of market churn is likely to continue in the near term, said Liz Ann Sonders, chief investment strategist at the Schwab Center for Financial Research (SCFR). Still, the current rally continues to narrow, with only 4% of the S&P 500 trading at four-week highs as of last Friday, meaning the overall market could be more susceptible to pullbacks if the leaders falter. Pullbacks are also possible if this week's geopolitical hopes don't pan out. Meetings between Trump and Ukrainian President Zelensky and with Gulf State leaders are scheduled before Trump returns to Washington to meet Xi on Thursday. Trump and Iran's president aren't scheduled to meet, Reuters reported.
    
2. Signs of tightening in the jobs market: Fed Chair Kevin Warsh said strengthening of the labor market was one factor in the Fed's decision to raise rates in September after holding in July. The unemployment rate is consistent with full employment, he said, with risks to the labor market roughly balanced. Unlike in 2022, there is little evidence that excessive demand or rising wages are fueling inflation. But last week continuing unemployment claims hit their lowest level since January 2024. That could mean we're starting to see some tightness in the labor market, which may eventually turn into higher wages and inflationary pressures, said Kevin Gordon, head of macro research and strategy at SCFR. There's no sign of that so far in average hourly earnings, but the Atlanta Fed's Wage Growth Tracker shows it warming up, Gordon noted. The three-month moving average of overall median wage growth hit 4.1% in August, the highest level in 11 months. The figure for job-switchers hit 5%, the highest in more than two years.
    
3. Mag 7 stocks lag: The Magnificent Seven stocks all rose on Monday, but investors and analysts have questioned for months whether they can continue to live up to their superlative. Checking in as the final quarter approaches, only Apple (AAPL) has outperformed the Nasdaq-100^® Index this year. As of September 21, the iPhone maker had gained nearly 25%, compared with roughly 20% for the index. Nvidia (NVDA) ranks second and is the only other Mag 7 name posting a gain of more than 20% in 2026. Bringing up the rear is Tesla (TSLA), off about 17% year to date. The remaining members are delivering more modest returns: Alphabet (GOOGL) is up about 14%, Amazon (AMZN) has tacked on roughly 12%, while Microsoft (MSFT) is ahead by less than 3%. Meta's (META) furious rally over the past four-plus weeks—it has gained more than 36% since mid-August, and more than 10% on Monday—has it up about 15% on the year now. Growing competition in chips and artificial intelligence and concern about AI-related spending may be behind some of the Mag 7's underperformance.

• Volatility eased today amid rising hopes for diplomatic progress. At 14.7, the Cboe Volatility Index (VIX) is tracking just above this month's long-term lows. A weak VIX suggests investor uncertainty is less prevalent.
   
• Shopify (SHOP) jumped almost 4% early after announcing the company will partner with Meta to use Meta's Muse AI agent for checkout with Shop Pay at all Shopify stores.
   
• Alibaba (BABA) rose 3% as the Chinese company unveiled a new AI chip and announced plans to expand its data center footprint.
   
• Labcorp Holdings (LH) fell 6% early today after the Centers for Medicare and Medicaid Services (CMS) announced that Medicare has been paying more than private payers for diagnostic services and will adjust to align with private sector rates, CNBC reported. Quest Diagnostics (DGX) also fell on the news.
   
• Vicor (VCR) popped almost 10% after the power electronics firm raised third quarter revenue guidance.
   
• Marathon Petroleum (MPC) slipped 2% early after a 5% drop yesterday, hurt by falling oil prices and a downgrade by Jefferies to hold from buy.
   
• Big movers in the tech space Monday included Akamai Technologies (AKAM), which rose more than 12%. Qualcomm (QCOM) rose more than 9% and AppLovin (APP) jumped about 7%.
   
• Bitcoin rose about 7% Monday, topping $86,000, as momentum carried over from last week, when the U.S. Securities & Exchange Commission said it would permit limited trading of tokenized stocks on blockchains. Bitcoin treasury company Strategy (MSTR) rose more than 9% Monday.
   
• Warner Bros. (WBD) rose more than 10% Monday, while Paramount (PSKY) shed about 3%, after Paramount reached a settlement with states that had sued the company to block its takeover of Warner Bros.

Is the labor market tightening? Kevin Gordon looks at the signs in the latest Week Ahead video. 

The Cboe Volatility Index (VIX—candlesticks) has been closely tracking the crude oil (/CL—purple line) price lately, showing that market uncertainty reflects oil prices to some extent. This isn't a new feature. VIX and oil have often traded in sync over the last four years.

September 23: Expected earnings from Cintas (CTAS), Paychex (PAYX), and General Mills (GIS).
September 24: August new home sales and expected earnings from Darden Restaurants (DRI) and Costco (COST).
September 25: August durable goods orders and final September University of Michigan Consumer Sentiment.
September 28: Expected earnings from Jefferies Financial Group (JEF).
September 29: August Job Openings and Labor Turnover Survey (JOLTS) and consumer confidence for September.