Indices
- Dow 46,315 (new record close), +481 or +1.05%.
- Nasdaq 22,631 (new record close), +490 or +2.21%.
- S&P 6,664 (new record close), +80 or +1.22%.
- MSCI EAFE 2735.66, -23.30 or -0.84%.
- USD10Y 4.135%, +7.4bp or +1.82%.
- WTI Crude $62.68 bbl, -$0.01 or +0.00%.
Fed Cuts, Markets Soar
As expected, the Federal Reserve voted 11–1 to cut interest rates by 25 basis points on Wednesday. The lone dissent came from recent Trump appointee Stephan Miran, who favored a deeper 50-basis-point cut. In its statement, the Fed noted that economic growth is moderating, the labor market has softened, and while inflation remains above target, the greater risk now lies in employment.
Markets responded enthusiastically. There was no “sell the news” reaction—stocks surged to multiple new record closes. The Fed also struck a notably more dovish tone compared to its last meeting. According to the updated “dot plot” chart of policymakers’ projections, most voters now expect additional rate cuts before year-end, though views still vary widely.
This Friday’s Personal Consumption Expenditures (PCE) report—the Fed’s preferred inflation gauge—will be critical. A hotter-than-expected reading (above the +0.3% consensus estimate) could cast doubt on further rate cuts and put near-term pressure on markets.
Last Week in Review
- Corporate earnings: General Mills (GIS) reported revenues in line with expectations, beat on earnings, and reaffirmed annual guidance. Shares fell slightly (-1.5%). FedEx (FDX) topped both revenue and earnings forecasts, sending shares up +5.5% after the report.
- Retail sales: August U.S. retail sales were unchanged from July’s strong +0.6% reading but came in well ahead of the +0.3% consensus forecast - another sign of consumer resilience.
- Labor market: Weekly jobless claims fell to 231,000, better than both forecasts and last week’s revised figure. While the labor market has cooled compared to 2023, this week’s report suggests some stability.
Looking Ahead: September 22 – 26
It’s a relatively quiet week for data and earnings, with the main event being Friday’s PCE inflation report. Markets will be watching closely: a softer print could reinforce expectations for more cuts, while a hotter number could trigger volatility.
On the corporate side, Micron Technology and Costco Wholesale are the key names reporting results.
What This Means for You
- Rate cuts are here: The Fed’s decision confirms a shift toward easing. While this tends to support markets, future cuts will depend heavily on incoming inflation data.
- Market records: Stocks hitting all-time highs reflects optimism but also reminds us that short-term pullbacks are always possible. Diversification remains key.
- Focus on the big picture: Whether inflation comes in slightly above or below forecasts, these month-to-month moves are part of the normal cycle. Your portfolio is built to weather this environment with an emphasis on long-term growth and risk management.
Economic Calendar
- Monday – N/A. Earnings: N/A.
- Tuesday – September U.S. S&P Flash Services and Manufacturing PMI. Earnings: Micron Technology (MU).
- Wednesday – N/A. Earnings: N/A.
- Thursday – Initial Jobless Claims, Q2 GDP (second revision), August Durable Goods Orders. Earnings: Costco Wholesale (COST).
- Friday – August Personal Consumption Expenditure. N/A. Earnings: N/A.
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Disclaimer: This is not a recommendation to buy or sell any of the securities listed above. I personally, or a family member whose account I control, have positions in the following securities/assets...Bitcoin, Ethereum, Solana, ACHR, BITB, HPE, ITIB, NVDA, and RIVN.