Market Update
The Federal Reserve (Fed) is restarting its rate-cutting cycle, which has often been a positive sign for the stock market.
The Fed lowered interest rates by 0.25% in September. This widely anticipated cut was the first one since December of 2024. We may see even more cuts before the end of the year. The Fed’s Summary of Economic Projections (SEP) forecasts for real gross domestic product (GDP) growth were revised higher for 2025 and 2026. Their unemployment rate outlook went down a bit for the rest of 2025 and 2026, and their adjusted inflation outlook is higher for 2026, leaving room for more rate cuts from the Fed in response.
Consumer sentiment remains low, and the labor market has cooled, but the equity markets have rallied since the beginning of this year. While the beginning of the year was a bit weak, the S&P 500 has come up approximately +33% off the April lows.
Since 1950, October has posted positive returns nearly 60% of the time, and an average gain of 0.89%, though past performance does not guarantee future results. And according to LPL Financial research, the fourth quarter is the strongest three-month period of the year with a combined average return of almost 2% since 1950 and over 6% over the past five years.
While there are still concerns with the labor and housing markets, economic growth is rebounding since the first quarter decline, and the market seems to be supported by the expectation of continued interest rate cuts from the Fed.
Source: LPL Research, FactSet, Bloomberg 09/30/25 (1950–current)
Disclosures: All indexes are unmanaged and cannot be invested into directly. Past performance is no guarantee of future results. The modern design of the S&P 500 Index was first launched in 1957. Performance before then incorporates the performance of its predecessor index, the S&P 90.
Market Recap
The S&P 500, Nasdaq, and DJIA saw positive performance in September 2025.
The S&P 500 was up 3.53% for the month, making this its fifth consecutive month of gains. This brings its YTD return to 13.72%.
The NasdaqComposite Index continued its strong performance, posting a gain of 5.61%. The YTD return is at 17.34%.
The Dow Jones Industrial Average (DJIA) also saw its fifth straight month of gains at 1.87%. The YTD return is at 9.06%.
As always, if you have questions about how the economy may impact your investments, please don’t hesitate to reach out to us.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.
Sources:
https://www.morningstar.com/indexes/spi/spx/performance
https://www.morningstar.com/indexes/dji/!dji/performance
https://www.morningstar.com/indexes/xnas/@cco/performance
https://www.lpl.com/research/blog/can-october-seasonals-keep-the-melt-up-going.html
https://www.lpl.com/research/blog/the-federal-reserve-cut-rates-now-what.html