Market Performance Overview:

September was a strong month for global financial markets, with broad-based gains across major asset classes.

• The S&P 500 reached a new record high, rising 3.65% for the month and extending its year-to-date gain to over 15%.
• Small-cap stocks also performed well, with the Russell 2000 up 3.11% in September.
• Notably, emerging markets outperformed developed markets, with the MSCI Emerging Markets Index surging 7.18% in September, driven by a weaker U.S. dollar and improving local economic conditions.
• Bond markets rallied as the Federal Reserve’s rate cut pushed yields lower; the Bloomberg U.S. Aggregate Bond Index returned 1.09% for the month.
• Gold had a historic run, benefiting from both central bank easing and geopolitical uncertainty, while energy prices remained elevated, supporting the performance of energy sector stocks.

Economic Data: Rates, Inflation, Labor Market

• The U.S. Federal Reserve cut its benchmark interest rate by 0.25% in September, marking its first reduction since 2024 and bringing the target range to 4.00–4.25%. This move was widely anticipated and aimed at supporting economic growth amid signs of a slowing labor market and persistent, though moderating, inflation.
• The Fed signaled the possibility of two additional rate cuts by year-end, with futures markets assigning a high probability to another cut at the late October meeting.
• The U.S. labor market showed signs of cooling, with nonfarm payroll growth slowing to an average of +29,000 per month since June and a modest recovery in August. The unemployment rate edged higher but remains at historically low levels, indicating continued resilience.
• Consumer spending has moderated but remains a bright spot, supported by steady income growth and low layoffs.
• Inflation, as measured by the Fed’s preferred PCE index, is projected at 3.0% for 2025—above the central bank’s 2% target—mainly due to higher energy and housing costs.

Corporate Earnings and Sector Highlights:

Corporate earnings for the third quarter point to solid momentum across several key sectors.

• The technology sector is set to post robust gains, fueled by strong demand for digital solutions and ongoing innovation.
• Energy companies are projected to benefit from elevated oil prices, supporting revenue growth and profitability.
• While consumer-focused sectors continue to navigate shifting spending patterns and higher input costs, many are finding new avenues for growth through product diversification and operational efficiencies.

Geopolitical and Notable Global Developments:

• Geopolitical events, including tensions in Eastern Europe and the Middle East, contributed to market sensitivity, particularly in energy markets. The recent U.S. government shutdown has had limited immediate market impact, as investors remain focused on economic data and central bank policy. Trade negotiations and global supply chain developments continue to be closely monitored.
• Asian markets delivered strong returns, reflecting renewed investor optimism.
• The European Central Bank and Bank of England maintained their current policies, balancing inflation concerns with evidence of slowing economic activity, particularly in Germany and France. Inflation has eased slightly but remains elevated.

Looking ahead, earnings projections remain constructive, with several sectors anticipating sustained demand and improving global supply chain conditions.

Key dates for October:  

• Q3 earnings season for major companies began the week of October 13 through late October
• The U.S. Consumer Price Index (CPI) for September: October 15
• Next U.S. Federal Reserve Meeting: October 28-29 

We will continue to monitor developments and provide timely updates as new information becomes available. As always, please feel free to reach out to us with any questions. We are always happy to help!