December 2025 Financial Market Update

Last month looked calm on the surface, but proved more nuanced. U.S. markets spent most of November near record highs before losing momentum as AI enthusiasm met earnings reality, Fed officials tempered rate-cut expectations, and a government shutdown left investors with less economic data than usual.

The month crystallized around three themes. First, the evolving macroeconomic backdrop presented challenges, with labor market data gaps and mixed inflation signals. Second, the government shutdown and Fed messaging reshaped rate expectations. Finally, dominant AI players, housing trends, and broader sector rotation (the movement of stock market investment from one industry to another) defined the year-end investment landscape.

Major U.S. Stock Indices 

November’s mixed performance reflected shifting Fed rate-cut expectations and sharp rotations in AI and mega-cap tech (tech companies with market valuations over $200 billion). Renewed hopes for easier Fed policy fueled late-month rebounds, though profit-taking in stretched tech leaders capped overall gains.

• The S&P 500 edged up 0.13%. 
• The Nasdaq 100 declined 1.64%.
• The Dow Jones Industrial Average gained 0.32%.

Macro Backdrop & Policy

• November’s macro story was defined by what didn’t happen: government data. The 43-day federal shutdown erased October’s Consumer Price Index (CPI) entirely and pushed the payrolls report into December, leaving investors and the Federal Reserve navigating in fog with no clarity on near-term inflation or labor momentum.
• In that vacuum, Fed voices set the tone. Vice Chair Philip Jefferson argued the October rate cut nudged policy closer to neutral. In contrast, Governor Christopher Waller backed another quarter-point cut in December, insisting inflation is gliding toward 2%, the labor market is cooling, and he wasn’t worried about a snapback.
• But the late-October Federal Open Market Committee (FOMC) minutes revealed a central bank split down the middle. Several officials felt the October cut overshot, and many wanted rates on hold through 2025 unless growth weakens. With September inflation still running around 3% and core inflation (which removes volatile food and energy) stuck near 0.3% month-over-month, price pressures remain stubborn enough to keep hawks uneasy and doves pressing their case.

Labor Market & Inflation 

• With October’s household survey never collected, markets head into December flying blind on the unemployment rate during the shutdown. The Bureau of Labor Statistics (BLS) will deliver a combined October and November payroll print and a refreshed unemployment rate in mid-December — a report that now looms large for the December FOMC meeting.
• On inflation risks, Fed officials flagged competing forces. AI-driven investment is giving productivity a lift, but shifting policies on tariffs and immigration threaten to tighten labor and goods markets. The push and pull leaves the inflation outlook muddier heading into year-end.
• Cleveland Fed President Loretta Mester sharpened this cautionary tone on November 6th, warning that while Gross Domestic Product (GDP) and unemployment hover near long-run norms, inflation has edged higher again. With policy rates now a half-point lower than in August, she argued the Fed’s stance is less restrictive and may exert “less downward pressure” on inflation.

Housing Market

• Existing-home sales held at a 4.1 million annual pace in October, with the median price at $415,200, up modestly year-over-year. Inventory remained tight at 4.4 months of supply, while U.S Federal Housing data showed national prices up 2.2% year-over-year in Q3 before stalling in September.
• Importantly, the rise in home prices this year masks sharp regional divergence: gains in Connecticut and New Jersey offset declines in Florida and D.C., while softness spreads beyond isolated markets. Sellers are capitulating as October saw a surge in delistings and record price cuts.
• Forecasts point to gradual recovery through 2026, but the current reality is extended listings, thinner volume, and buyers back in the driver’s seat.
• Note that the typical U.S. homebuyer is nearing retirement, with the median age hitting 59, while first-time buyers now average a record 40 years old. High prices, elevated mortgage rates, and thin inventory are locking out younger households, while favoring older, equity-rich repeat buyers.

The Path Forward

November’s mixed signals offer important guideposts. The Fed is easing, but divided views and noisy data make aggressive bets premature. Meanwhile, AI and mega-cap tech continue driving profits, though recent volatility underscores the need for selectivity. With data disruptions elevating the value of regular economic metrics, the Fed’s rate decision on December 10th and AI companies’ progress updates will serve as critical economic checkpoints.

The environment calls for balance: staying diversified, managing risk thoughtfully, and focusing on the long-term. As always, we’re here if you have any questions or concerns as the end of the year approaches.

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Last week brought significant market turbulence as investors rotated sharply from growth to value stocks amid heightened Federal Reserve uncertainty, delayed economic data releases, and evolving policy shifts in Washington. Despite solid fundamentals, equities experienced sharp reversals.

These dynamics highlight the elevated volatility we’re navigating. With ongoing data disruptions and emerging macroeconomic risks, the path ahead for Fed policy remains unclear. Below are the critical factors on our radar.

Stock Index Performance 

• The S&P 500 declined 1.95%. 
• The Nasdaq 100 slumped 3.07%. 
• The Dow Jones Industrial Average fell 1.91%.

Market Whiplash

• The abrupt end to the 43-day government shutdown ignited a wave of relief-fueled optimism early in the week, but the rally quickly fizzled as investors confronted a glaring problem: no data. Without October’s Consumer Price Index (CPI) or labor reports, markets are flying blind, scrambling for clues from private sector indicators and alternative metrics to fill the void.
• The Federal Reserve found itself in the same fog. Lacking fresh inflation and employment numbers, policymakers face a December meeting without a clear compass. Market expectations for a quarter-point cut dipped from 67% to 50% as the week wore on before a dramatic reversal on Friday, underscoring just how much uncertainty the data blackout has injected into Fed calculus.
• Corporate earnings offered some direction, with Nvidia stealing the spotlight. The chip giant — now the world’s most valuable company — crushed expectations in its data center business, posting $51.2 billion in revenue despite a minor stumble in gaming. The blockbuster results reignited familiar debates: Are tech valuations sustainable? Can AI momentum carry the market? And who leads from here?
• Meanwhile, Wall Street executed a sharp reversal. High-flying tech stocks got hammered as investors stampeded into old-economy stalwarts: healthcare, industrials, and big banks like JPMorgan and Bank of America. The playbook was textbook: when visibility vanishes, reach for what you know.

The Week Ahead 

• The Federal Reserve’s next move is in sharper focus, with odds of a December rate cut soaring to 75% by week’s end after dovish Fed commentary on Friday and persistent signs of labor market softening. This is creating support for equities and moderating recent bond market losses.
• Sector dispersion (a measure of the range of returns among different sectors) will remain pronounced. Leaders such as Nvidia and Walmart highlight resilience in AI and consumer spending, but tech and consumer discretionary stocks may face ongoing pressure from cautious guidance, a flight to safety, and headline-driven swings.
• As a reminder, U.S. markets will be closed on Thanksgiving Day and will close at 1 p.m. or 1:15 p.m. ET on Black Friday.

Heading into Thanksgiving week, expect continued volatility as equity markets digest earnings surprises, shifting rate expectations, and year-end positioning. We’re here to help you navigate the turbulence. Don’t hesitate to reach out with questions or concerns.

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The 43-day U.S. government shutdown ended on November 12th, but its impact lingers. Key economic data on jobs, inflation, and retail sales remain frozen or delayed, leaving investors navigating in the dark.

U.S. equities whipsawed last week: a sharp Monday sell-off gave way to a tech-led recovery by Friday’s close. With volatility rising, traders grappled with data scarcity and unresolved policy questions heading into the holiday season.

Stock Index Performance 

• The S&P 500 ticked up 0.08%. 
• The Nasdaq 100 slipped 0.21%. 
• The Dow Jones Industrial Average rose 0.34%.

Holiday Cheer or Fear?

• Expectations for imminent Federal Reserve rate cuts are dimming. Repeated hawkish commentary from key officials — citing stubborn core inflation and sticky wages — has pushed market pricing for the next rate cut from near-certainty down to below 50% odds by December.
• This uncertainty is driving clear risk aversion for retail investors, who are signaling a marked retreat from volatile assets. Meanwhile, institutional investors are buying the dip even as concerns spread across Wall Street.
• Indeed, JPMorgan’s position offers a window into Wall Street’s consensus: The economy absorbed shocks, AI kept driving earnings, mergers and acquisitions revived, tariffs hit prices more than growth, and the dollar’s slide has run its course. Their prescription stays unchanged: remain invested, stay diversified, and use volatility to upgrade holdings.
• Despite S&P 500 earnings growth running at 13% year-over-year, the index has stalled recently as investors weigh key macroeconomic factors, leaving top asset allocators focused on sector divergence (different market sectors experiencing markedly different performance) and forward guidance over headline earnings strength.

The Week Ahead 

• Wall Street enters a critical period dominated by delayed economic data, corporate earnings, and shifting global policy signals. ​Release of the delayed September jobs report on Thursday, Nov. 20, could set the tone for risk assets and Fed policy expectations. Initial Jobless Claims, also on Thursday, and continuing claims will provide real-time insight into employment trends as investors look for confirmation of labor market resilience or new cracks.
• Federal Open Market Committee (FOMC) October Meeting Minutes, to be released on Wednesday, Nov. 19, will be closely scrutinized for hints about the December and 2026 rate path, with the market currently split on the likelihood of a pause versus a cut.​ Fed officials’ speeches and press appearances will also remain critical for parsing policy direction.
• Nvidia, the largest company by market value, reports earnings on Wednesday, Nov. 19. It will be a bellwether for AI and tech sector sentiment, with skittish investors looking to its guidance for cues on broader growth equity prospects.

The convergence of the delayed jobs report, Fed minutes, and bellwether earnings will heavily influence market sentiment, asset allocation, and portfolio hedging strategies through Thanksgiving week.

As always, long-term investing remains a strong approach in changing markets. Please reach out if you have any questions or concerns. We’re always here to support you.

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Markets lost their footing last week as several headwinds converged. A tech and AI sell-off, persistent inflation worries, and policy uncertainty loomed large against the backdrop of a 38-day government shutdown. Unsurprisingly, with consumer sentiment hovering near long-term lows, investors have turned decidedly more cautious.

Last week’s pullback didn’t just dent performance — it’s revealing deeper shifts in market behavior as we head toward year-end. Here are the major themes and narratives at play.

Stock Index Performance 

• The S&P 500 fell 1.63%. 
• The Nasdaq 100 declined 2.36%. 
• The Dow Jones Industrial Average slid 1.04%.

Consumers Turn Gloomy

The University of Michigan’s November consumer survey took on outsized importance amid scarce government data.

• The Consumer Sentiment Index plunged to 50.3, the lowest reading since June 2022 and just above the all-time record low. The decline of about 6% from October was broad-based, driven by a sharp deterioration in assessments of current personal finances and expected business conditions for the year ahead.
• The persistent government shutdown and worries about inflation and jobs were cited as major drivers of the deterioration.
• Sentiment dropped across all age, income, and political groups, but those with significant stock market holdings (the wealthiest third by invested equity assets) reported somewhat more optimistic views due to strong asset performance, revealing a sharp “K-shaped” dynamic in economic confidence.
• The Current Economic Conditions index at 52.3 signals consumers’ sharply negative feelings about their present finances and ability to make major purchases, reflecting a 17% drop in reported personal financial strength.​
• The Consumer Expectations Index fell to 49.0, indicating widespread pessimism about the year ahead — including future income, job prospects, and broader economic health — with an 11% decline in expectations for coming business conditions.​

The Week Ahead 

• The government shutdown has delayed crucial data on inflation, employment, and retail sales, forcing investors to rely on private and alternative gauges instead. This lack of transparency amplifies market sensitivity to every unofficial data point, earnings report, and survey release that could influence Federal Reserve expectations or risk sentiment.
• The “AI bubble” narrative and sharp tech valuation reset have taken center stage, especially following significant losses in the “Magnificent Seven.” Whether high-growth tech and semiconductor names stabilize or deteriorate further will set the tone for broad market risk appetite.
• With the Senate advancing a government shutdown bill on Sunday night, we will see how this develops throughout the week. It will likely take time to reopen the government, with the Senate still needing to pass the legislation and the House of Representatives needing to reconvene for a vote if the legislation passes the Senate as expected.

Markets face fragile investor psychology, elevated event risk from missing official data, the tech sector’s stability, and ongoing Fed uncertainty. In this environment, capital preservation and active risk management are our focus, and you can count on me to navigate it alongside you. Please don’t hesitate to reach out if you have any questions or concerns.

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Recent weeks have brought significant developments — from pivotal Federal Reserve policy shifts to breakthrough advancements in technology. In October, markets also faced an unusual challenge: a data “fog” from the government shutdown that underscored the value of maintaining a diversified and adaptive portfolio approach.

Meanwhile, sustained momentum in AI and cloud computing has reinforced mega-cap technology’s leadership, providing stability even as questions around inflation and labor markets persist.

As we move through this pivotal period, we are committed to helping you make confident, informed decisions in an evolving landscape. Today, we’ll unpack the latest policy developments, economic data, and investment trends shaping the path forward.

Major U.S. Stock Indices 

In October, all three major U.S. equity indices posted solid gains, reversing recent volatility as strong earnings from leading technology companies lifted sentiment. Amazon and Alphabet rallied on impressive results, while Meta and Microsoft lagged amid investor concerns about their aggressive AI and cloud infrastructure spending.

Here’s the scorecard:

• The S&P 500 gained 2.27%. 
• The Nasdaq 100 surged 4.44%.
• The Dow Jones Industrial Average climbed 2.42%.

Fed Policy and Interest Rates

• The Fed cut rates by 25 basis points in October, bringing them to a range of 3.75%-4.00%, the lowest in nearly three years. This marks a clear pivot: policymakers are now more concerned about a cooling labor market than stubborn inflation, especially as the government shutdown clouds the data.
• Inflation isn’t cooperating, though, still hovering around 2.9%. This puts the Fed in a tricky spot — trying to support employment while price pressures refuse to fade to its 2% target. It’s a delicate balancing act that reflects a meaningful shift in the Fed’s priorities. 

• The Fed will end quantitative tightening on December 1st, halting its balance sheet runoff and redirecting proceeds from maturing mortgage securities into Treasuries. This combination of lower short-term rates and added longer-term liquidity is designed to ease financial conditions and support both consumer spending and business investment.
• The path forward remains murky. Federal Reserve Chair Jerome Powell signaled December cuts aren’t guaranteed, and a rare 10-2 vote exposed real division among Fed officials. This uncertainty underscores why staying nimble with your portfolio is more important now than ever. 

Economic Data: Growth, Inflation, Labor

• The federal government shutdown that began on October 1st is now among the longest in U.S. history, projected to slice 1-2 percentage points off Q4 gross domestic product (GDP) with a permanent $7-14 billion hit. Federal workers are bearing the brunt, while consumer spending has visibly wilted. 
• Inflation refuses to yield, clinging to 2.9-3.0% through September. Shelter costs jumped 3.6%, food climbed 3.1%, and gasoline rose sharply month-over-month. This relentless services inflation keeps grinding away at household wallets, making the Fed’s pivot all the more precarious. 
• September revisions revealed 911,000 phantom jobs from March 2024 to March 2025 — the largest downward revision since 2002. Unemployment has crept up to 4.3%, goods-sector hiring has gone cold, and wage pressures are easing. Overall, these crosscurrents paint a fragile economic landscape heading into year-end. 

Macro Headwinds: Tariffs and Global Trends

• Tariff policy has become both windfall and warning. Collections surged 150% to $195 billion in fiscal year 2025, but multiple states now cite tariff threats as a “top concern” among consumers, translating into softer retail sales and volatile tax collections. 
• Globally, the picture has darkened. China’s growth decelerated to 4.8% in Q3 — its weakest since last year — hit by property woes, U.S. trade friction, and weak domestic demand. S&P Global projects global growth of 2.7% for 2025 and 2.6% for next year, with the outlook for 2026 trimmed slightly from earlier estimates, underscoring that caution and selectivity are essential. 
• Despite global headwinds, the U.S. continues to outpace its peers. The International Monetary Fund (IMF) projects full-year growth of 1.9% compared with 1.6% for advanced economies overall. Corporate earnings tell the same story: analysts predict S&P 500 profits are expected to climb 11.2% year-over-year in 2025, fueled by tech leadership and minimal exposure to Europe’s and Japan’s stagnation.

Navigating What’s Next 

The themes shaping markets today — Federal Reserve rate cuts, AI-driven growth, data uncertainty, and global recovery — demand a thoughtful, forward-looking approach. Our focus remains on monitoring these shifts, identifying what truly matters, and translating it into clear guidance for your portfolio.

Whether we’re adjusting your asset allocation or exploring new opportunities in U.S. and international markets, we are committed to keeping you informed, prepared, and confident about the path forward. As always, please reach out if you’d like to discuss your portfolio or have questions about these developments.

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Markets moved through a surprisingly upbeat week with resilience, shrugging off Washington’s shutdown and finding just enough fresh economic data to keep the “soft-landing” story alive. 

With Big Tech earnings about to take center stage and the Federal Reserve meeting on deck, investors head into the week ahead with a sense of cautious optimism — watching closely but with room for confidence. Let’s look at the most important trends at work:

Stock Index Performance

• The S&P 500 added 1.92%. 
• The Nasdaq 100 gained 1.76%. 
• The Dow Jones Industrial Average led the pack, climbing 2.20%.

We’ve Got Data

Despite fewer releases due to the government shutdown, several key reports offered insight:

• Headline Consumer Price Index (CPI) for September rose 0.3% month-over-month, with year-over-year inflation at 3.0%. Core CPI rose 0.2% month-over-month and 3.0% year-over-year, both slightly below forecasts. This softer print reinforced the view that inflation pressures continue to cool.
• October’s Purchasing Managers’ Index (PMI) improved slightly to 52.2, and Services PMI rose one point to 55.2, signaling steady expansion in business activity.

• University of Michigan Consumer Sentiment in October fell to 53.6 from 55.1, highlighting consumer unease over job security and high prices​.
• Existing Home Sales increased to 4.06 million annualized units, above consensus estimates of 3.95 million, pointing to housing resilience despite high mortgage rates.
• Meanwhile, according to FactSet, third-quarter earnings season is off to a strong start: 29% of S&P 500 companies have reported, with 87% beating earnings per share (EPS) estimates — the strongest beat rate since Q2 2021 and well ahead of long-term averages.

These data points together painted the picture of an economy cooling modestly yet retaining underlying strength — strong enough to sustain consumer spending and hiring but weak enough to justify Fed easing. 

The Week Ahead 

• Markets are focused on this week’s Fed meeting, where policymakers are widely expected to deliver a second straight quarter-point rate cut, lowering the federal funds rate to 3.75-4.00%. With inflation moderating and the labor market showing signs of fatigue, investors are betting the Fed will lean toward support rather than restraint.
• On the earnings front, five of the “Magnificent Seven” will report, representing nearly a quarter of the S&P 500’s market cap. Analysts expect close attention on Microsoft’s AI cloud growth, Apple’s iPhone 17 demand, and Amazon’s logistics margins, all seen as key forces behind this year’s market momentum.

While Washington’s gridlock and Fed speculation dominate today’s headlines, long-term investing allows us to stay focused on the big picture. With that said, if you have questions or simply want to talk through what’s happening, we’re here — ready to provide perspective, reassurance, and a steady partner at your side as we move forward together.

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The government shutdown dominated headlines last week, halting key economic data and leaving investors to rely on private signals. Even so, markets held steady on expectations of another Federal Reserve rate cut at month-end. 

Earnings have been mixed while regional bank jitters and shifting tariff talk from the administration added volatility — but resilience is the theme for equity markets.

With that overview noted, let’s look at the most important things you need to know.

Stock Index Performance 

• The S&P 500 gained 1.70%. 
• The Nasdaq 100 jumped 2.08%. 
• The Dow Jones Industrial Average climbed 1.56%.

Economic Data & Shutdown Impact

• The economy enters mid-October in a fog, with the three-week shutdown freezing key reports from inflation to payrolls. September’s Consumer Price Index (CPI) is delayed until October 24th, and jobs and spending data are on hold indefinitely. This leaves the Fed “flying blind” as it heads into its October 29th policy meeting.
• Investors are relying on private gauges. Jobless claims suggest the labor market remains solid, though filings by furloughed federal workers are climbing. The Institute for Supply Management (ISM) manufacturing index ticked up to 49.1, still contractionary but hinting at stabilizing output and easing costs.
• The growth drag from the shutdown looks modest: about 0.15 percentage points of gross domestic product (GDP) per month by Goldman Sachs’ math. But the bigger risk is confidence, with gridlock weighing on business sentiment. Inflation expectations remain near 3%, and markets now largely expect one more Fed cut this month — more insurance than stimulus in a data-starved economy.

The Week Ahead 

• U.S.-China tensions and political risk remain in focus. Investors are watching President Donald Trump’s stance on a proposed 100% tariff package after last week’s partial pullback, with any renewed escalation likely to hit industrials and semiconductor stocks.
• Meanwhile, the government shutdown is clouding economic visibility, draining an estimated $15 billion a week in lost output.
• Earnings season kicks into high gear this week, with S&P 500 profits expected to rise about 8%, led by tech, industrials, and financials. Energy and consumer staples are set to lag, while investors focus on margins under cost pressure, AI spending’s role in lofty valuations, and the impact of slowing global demand on cyclical revenues.

While Washington’s standoff lingers and markets keep a close eye on monetary signals, we remain focused on helping you cut through the noise. Periods like this can also open the door to new opportunities, and our priority is to guide you forward with clarity, confidence, and a long-term perspective.

Feel free to reach out to us anytime with concerns or questions. We are always here as a resource for you.

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The U.S. government shutdown dominated headlines last week, delaying key data and adding near-term uncertainty. Still, markets held up on hopes for a “Goldilocks” mix of steady growth, easing inflation, and confidence that the Federal Reserve’s tightening cycle has ended. But late in the week, renewed tariff threats from President Trump sparked volatility and a more cautious tone, dramatically reversing some earlier gains. 

Now, here are the important developments to keep in mind over the coming days.

Stock Index Performance 

• The S&P 500 declined 2.73%. 
• The Nasdaq 100 lost 3.51%. 
• The Dow Jones Industrial Average dropped 2.70%.

Fed Playbook

• Policymakers have dialed down the pace of rate hikes and are letting fresh data call the shots, hoping to wrangle inflation without breaking the economy’s stride. With inflation still above target and job growth cooling, the Federal Reserve’s message to markets is simple: proceed with caution, and be ready to adjust if the numbers demand it.
• Minutes from the Fed’s September meeting revealed a house divided. While policymakers agreed to continue rate cuts into 2026 as the labor market softens, Chair Jerome Powell signaled a pause to reassess. Some officials want deeper cuts; others worry inflation isn’t done yet.
• Meanwhile, the government shutdown has created a data blackout. With official employment and production figures delayed, markets are now hyper-focused on private surveys and Wall Street estimates — turning every unofficial report into a potential market mover.

The Consumer Pulse

• Weekly jobless claims by first-time filers of unemployment benefits rose to 235,000 (per JPMorgan and Goldman estimates), pointing to subtle softening in the labor market. Continuing claims by people drawing ongoing unemployment insurance rose slightly to 1.92 million (40,000 higher year-over-year), with economists noting a “no firing, no hiring” pattern as uncertainty lingers.
• The University of Michigan’s sentiment index held steady at 55.0 in October, only five points above its historic low (Trading Economics, 2025). While the headline number beat expectations, more households expressed concern about economic conditions ahead, though inflation expectations eased slightly to 4.6%.
• September retail sales hit pause after two strong back-to-school months, with core sales (excluding autos, gas, and restaurants) dipping 0.49% month-over-month. But the year-over-year picture remains healthy at 5.72% growth, suggesting consumers are simply conserving firepower for the holidays.

The Week Ahead 

• Third-quarter corporate earnings season begins, especially among major U.S. financial companies and top tech names. In particular, bank results will provide some hard evidence on the health of consumer credit, corporate loan quality, and spending resilience amid ongoing uncertainty from the government shutdown and delayed economic data.
• The shutdown is impeding critical reports like the Consumer Price Index (CPI), freezing federal paychecks, and clouding fiscal policy. If the impasse persists, there may be heightened market volatility as investors navigate without key data releases.

Last week’s market swings are a good reminder to stay focused on long-term goals rather than short-term headlines. Periods of volatility are a normal part of investing, and your financial plan should be designed to navigate them — balancing opportunity with protection to keep you on track.

As always, if you’d like to review your portfolio or discuss how current trends might affect your strategy, We are here to help you stay informed and confident about the path ahead. Reach out anytime!

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Last week brought plenty of drama. Stocks hit record highs on unabated AI enthusiasm, the Fed hinted at more rate cuts, inflation showed signs of cooling, and a government shutdown delayed key data releases and clouded policy outlooks.

For investors, that mix means opportunity wrapped in uncertainty. Strong momentum, shifting Fed signals, tariff pressures, and a Washington-induced data blackout create a fast-changing backdrop.

Stock Index Performance 

Markets largely shrugged off the government shutdown, viewing it as a short-term political disruption rather than a major economic threat. Historically, shutdowns have had minimal long-term impact on stock performance. 

• The S&P 500 rose 1.09%.
• The Nasdaq 100 gained 1.15%.
• The Dow Jones Industrial Average increased 1.10%.

U.S. Government Shutdown

• The federal shutdown that began on October 1 is already muddying the economic waters. With the jobs report and other key releases on hold, investors are left partially flying blind just as the Fed weighs its next moves. The lack of hard data not only complicates policy decisions but also injects fresh uncertainty into markets.

• In the near term, economists estimate the hit at about 0.1 percentage point of annualized gross domestic product (GDP) per week — mostly from frozen government spending and reduced productivity. On paper, that’s a modest drag, but the cumulative toll grows quickly if the standoff drags on.

• Usually, shutdowns leave only a shallow mark on equities, with bonds steady so long as the debt ceiling isn’t in play. But with the Fed already battling inflation and consumer sentiment fragile, this time around could carry more bite than the usual Washington sideshow.

Mood vs. Money

• Consumer sentiment continued its downward slide, with the University of Michigan index falling to 55.1 in September — its lowest reading since May — reflecting ongoing concerns about inflation and the broader economic outlook.

• September’s dip in sentiment was modest but broad, spanning age, income, and education groups, and all five survey components. The one exception: sentiment held steady among households with larger stock portfolios, while those with smaller or no stock holdings saw confidence fall further.

• Still, not all indicators point to retrenchment. As we saw, retail sales rose 0.6% in August, and personal consumption expenditures are up roughly 3% year-over-year. That suggests many households are continuing to spend, though a prolonged drop in confidence could eventually weigh on demand.

The Week Ahead 

• A drawn-out government shutdown could unsettle markets and delay the release of key economic data. Updates on budget negotiations or standoffs may prove highly market-moving, while market focus may shift to private-sector indicators and corporate earnings until normal government reporting resumes.

• Third-quarter reports will put recent AI-driven enthusiasm and blue-chip resilience to the test. Strong results and confident outlooks could extend the rally, while disappointments from bellwether names risk triggering swift portfolio adjustments.

September reminded us that markets can test even the most disciplined investors. Maintaining a steady approach continues to pay off, even as data (or the lack of it) and Fed commentary drive short-term swings. Don’t hesitate to reach out with any questions or concerns.

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It’s been an active month for the markets, with stock indexes hitting new highs and the U.S. economy indicating notable resilience. Recent government data shows robust gross domestic product (GDP) growth and steady consumer strength, even as headlines showed continued questions about inflation trends and Federal Reserve policy. 

In September, the Fed delivered a widely anticipated interest rate cut, aiming to support growth while keeping an eye on price pressures. Wall Street is paying close attention — and so are we.

Today, we’re breaking down the latest economic data, Fed actions, and what they could mean for your portfolio this fall. Our goal remains the same: to keep you informed and well-positioned as we navigate the months ahead.

Major U.S. Stock Indices 

September saw U.S. stocks surge, with the S&P 500 reaching new all-time highs near 6,700. Small-cap and value stocks led the rebound, supported by lower rates and domestic growth, while technology, communications, and consumer discretionary drove sector gains. 

Here’s the tally for the month:

• The S&P 500 gained 3.53%. 
• The Nasdaq 100 jumped 5.40%.
• The Dow Jones Industrial Average rose 1.87%.

Growth & Consumer Spending

• U.S. GDP climbed to a 3.8% annual rate in Q2, marking the strongest expansion in nearly two years after being revised sharply higher. This momentum was fueled mostly by resilient consumers whose spending rose 0.6% in August, outpacing expectations and driving gains across retail, travel, and durable goods — even amid higher tariffs and inflation in the mix. 
• Business investment is mixed. Housing-related spending fell 5.1% as residential fixed investment cooled, underscoring continued weakness in the sector. Meanwhile, corporate demand for equipment and services held steady, signaling a focus on productivity gains, even as broader capital expenditures stayed muted. 

• Trade provided an added lift in Q2, as a sharp drop in imports narrowed the deficit and amplified the strength of domestic growth. The move reflected earlier inventory adjustments and lingering tariff effects, offering a buffer for the U.S. economy at a time of global uncertainty. 
• Consumer spending may remain the linchpin for growth as housing and government outlays show signs of fading. For now, resilient households are keeping the recovery on track, but investors should watch for pressures that may challenge this momentum into year-end. 

Fed Policy Easing

• The Fed cut rates by 25 basis points in September, lowering the federal funds target to 4.00-4.25%. Policymakers debated a larger 50-basis-point cut, reflecting uncertainties about persistent inflation versus rising slack in the labor market. 
• The Fed’s September economic projections raised growth estimates and signaled expectations for further cuts into late 2025 and early 2026, but policymakers stressed a “data-dependent” approach. The Federal Open Market Committee (FOMC) dot plot showed consensus for at least one more cut before year-end. 

• Mortgage rates, just above 6%, are expected to edge lower through year-end, making home purchases and refinances more affordable and supporting stronger demand from both households and businesses as borrowing costs decline. 
• Lower Fed rates are also expected to ease financing costs for businesses, particularly for operating loans and commercial real estate, freeing up capital for expansion and hiring. This more favorable credit environment is a timely boost for small firms and corporations planning major moves for 2026. 

Labor Market & Inflation

• U.S. job growth slowed sharply in August, with only 22,000 jobs added, while unemployment held at 4.3%, a four-year high. Hiring remains concentrated in healthcare, and demand for senior roles continues to outpace that for junior positions. 

• Inflation remains elevated at 2.9% year-over-year, with core prices up 3.1%. Wage gains of 3.7% are just keeping pace with rising costs, leaving many consumers feeling squeezed. In fact, through the second quarter of this year, the top 20% of earners accounted for roughly half of all spending. 
• Federal Reserve Chair Jerome Powell is walking a tightrope: the slowing labor market reduces pressure for aggressive inflation-fighting, but persistent price increases are still weighing on household budgets and economic sentiment. Any significant shift in jobs or inflation data could spark further changes to monetary policy — or rattle investors in the months ahead. 

Navigating the Markets 

September ended with the U.S. economy demonstrating steady momentum despite ongoing inflation and interest rate headlines. Stock markets reached new highs, supported by strong consumer spending, optimism around Fed rate cuts, and sector rotation into technology and value stocks. A government shutdown loomed, however, on the eve of October, rattling stock markets on the first morning of the month.

While markets evolve rapidly, you don’t have to navigate them on your own. We’re here to provide perspective, answer questions, and help you make informed decisions based on your financial priorities.

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Did Something in This Update Spark Your Interest?

Whether you’re a client or new to us, we’re here to help!

If you have questions or want to learn more, schedule a quick 15-minute call with a member of our team by clicking here.

…

Links to third-party websites are for general information purposes only and do not constitute any offer or solicitation to buy or sell any services or products of any kind. The other parties are responsible for the content on their website(s). You are encouraged to read and evaluate the privacy and security policies on the specific site you are entering. They are not intended and should not be relied upon as investment, insurance, financial, tax, or legal advice.