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Higher interest rates and AI safety fears put the stock market to the test last week Published Sat, Sep 19 2026 12:03 PM EDT Alexa LoMonaco @in/alexa-lomonaco/ Investors wrestled with the prospect of a new Federal Reserve rate-hiking cycle and fresh concerns about AI safety last week, fueling volatility across Wall Street. The Dow fell 1.7%, marking its third straight losing week. The 30-stock average was hit the hardest by the Fed's interest rate hike, especially the banks. Goldman Sachs lost nearly 8.5% for the week; it was the worst-performing Dow stock and our worst-performing portfolio stock. Fellow Club names Wells Fargo , BNY , and Capital One also fell sharply last week. For the week, the S & P 500 and the Nasdaq fared better, slipping just 0.08% and gaining 0.7%, respectively, as investors returned to artificial intelligence stocks after an early-week sell-off. While much of the software group had winning weeks, investors took profits in Salesforce , which has gained more than 50% quarter-to-date after being crushed earlier this year. Oil remained another major source of uncertainty — and driver of inflation worries — as U.S. benchmark West Texas Intermediate crude and international Brent crude on Tuesday hit their highest levels since the middle of May on Mideast conflict-driven supply concerns. While a subsequent three-session slide brought both WTI and Brent closer to flat for the week, the damage was done to stocks that are sensitive to oil spikes. That's why Club names Boeing , as well as FedEx Freight and FedEx , were among the our biggest losers of the week. Here's a closer look at the three developments that drove our portfolio this week. Fed raises the difficulty for stock pickers The Fed raised rates by a quarter percentage point Wednesday, its first hike in three years , bringing its benchmark rate to 3.75% to 4%. During his post-meeting news conference, Fed Chairman Kevin Warsh said that "inflation is too high and has been for too long," and that Wednesday's rate increase would support a return to the central bank's 2% inflation target . While the move was widely expected, Warsh's repeated references to worrisome price pressures sent the market sharply lower Wednesday. Stocks staged a snap-back rally Thursday and were little changed Friday . Jim said Wednesday's hike makes it harder to make money in stocks because investors are now " fighting the Fed ." Higher rates tend to slow economic activity by making borrowing more expensive and bonds more competitive with stocks for investment dollars. The 10-year Treasury yield finished the week back at 5%, after hitting nearly two-decade highs above 5.04% during Tuesday's oil surge. Yields have been moving with crude prices. Not fighting the Fed doesn't mean investors should abandon the market altogethe r. Past hiking cycles have often brought shifts in leadership, with defensive sectors holding up better early and technology typically rebounding later . That makes stock selection more important, which is why we added to our BNY position on Tuesday and again on Thursday . The bank is less exposed to concerns about higher deposit costs and slower loan growth because roughly 70% of its revenue is fee-base…