“Everyone thinks of changing the world, but no one thinks of changing himself.”
-Leo Tolstoy
Here’s what you need to know this week:
- Stocks rise in anticipation of an interest rate cut
- All eyes turn to the Federal Reserve
Winning Streak Continues
Stocks continued their bull run last week due to widespread expectations that the Federal Reserve will finally begin cutting interest rates again. The S&P 500, NASDAQ and Dow Jones all close the week at new record highs. There were two major economic reports that added to investor optimism:
The first was the Consumer Price Index (CPI) report for the month of August. The report showed annualized inflation in line with Wall Street expectations at 2.9%:
However, the report also showed monthly inflation at 0.4%, the highest since January. Additionally, the report showed certain categories like food and energy rising 0.5% and 0.7% respectively, potentially indicating effects from tariffs[1].
The second report was the Current Employment Statistics (CES) from the Bureau of Labor Statistics (BLS), which revised the total amount of US jobs added from March 2024 to March 2025 downwards by -911,000[2]. BLS revisions are common due to the difficulty of collecting nationwide jobs data, but a downwards revision of nearly one million jobs is an unusually large change.
While the lackluster jobs revision casts a shadow on the larger US economic picture, it also increases the odds of an interest rate cut from the Federal Reserve. The Fed’s dual mandate instructs the Fed to manage both inflation and unemployment; a deteriorating labor market means the Federal Reserve is more likely to loosen economic conditions (by lowering interest rates) to spur more hiring.
Decision Day
For the last two days, the Federal Open Market Committee (FOMC) have been meeting to determine interest rate policy. Investors are all but certain that the Fed will opt for a 25 basis point (0.25%) rate cut, bringing the Fed’s rate down to 4.00-4.25%. As of writing, the bond market is assigning more than a 96% chance of a 25 bp cut, and a 3.9% chance of a “jumbo” rate cut of 50 basis points[3].
While interest rate cuts have many different economic effects, they tend to have a positive impact on stocks. The Federal Reserve has initiated ten different rate cutting cycles since 1980, and in eight of those ten instances stocks were higher a year later:
The two outliers are obviously the dot com bubble and the Great Recession. No one knows what this cycle holds, but this chart shows why investors remain optimistic for now. The Federal Reserve will announce their decision this afternoon at 1:00 PM CT and Federal Reserve Chairman Jerome Powell will speak to the press shortly after at 1:30 PM.
What Else
- President Trump will meet with Chinese President Xi Jinping this Friday to negotiate trade policy
- Political activist and media personality Charlie Kirk was murdered while hosting an event at Utah Valley University; law enforcement officials believe they have apprehended the alleged shooter
- Legendary actor Robert Redford passed away at the age of 89
- Secretary of State Marco Rubio met with Israeli Prime Minister Benjamin Netanyahu to discuss terms of a ceasefire in Gaza
- A federal judge dismissed two terrorism charges against Luigi Mangione, the alleged shooter of UNH CEO Brian Thompson
What We’re Reading
Following up on a story from a few weeks ago: historians have officially identified the remains of a large shipwreck in Lake Michigan. Last month an amateur historian stumbled across the wreckage of what is now known to be the F.J. King, a three-masted wooden schooner carrying iron ore across the Great Lake. Dredgers and scuba divers have taken pictures, video and samples from the shipwreck and more investigation is still ongoing. Click below to see the pictures and video from the submerged vessel and to read historians’ reconstruction of the ship’s final ill-fated voyage:
What’s Happening Downtown
Scissortail Park is hosting the annual Indian Food and Arts Festival this Sunday, September 21st. This event runs from 11:00 AM to 9:00 PM, is free to attend, and will feature a wide variety of food vendors, culinary workshops, live music and dance performances, arts & craft stations and more. Click below to learn more:
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Written by: Kane Ogle, CFP®
Steve Beck, Kane Ogle, CFP®, Amber Eduvigen, CFP®, Cale Olbert, CFP®, Brett Valentine, CFP®, Brandon Ingerson, Bill Daniel, Sam Postich, Jenni Hess