“It is only the farmer who faithfully plants seeds in the Spring, who reaps a harvest in the Autumn.”
-B.C. Forbes
Here’s what you need to know this week:
- Stocks reach new highs after the Federal Reserve slashes interest rates
- Markets look ahead to more immediate concerns in the wake of the rate cut
Rate Reduction
Stocks soared to new all-time highs last week as the Federal Reserve officially announced a 25 basis point (0.25%) interest rate cut. This was the first interest rate reduction since December of last year and brings the fed funds target rate (the mechanism through which the Fed controls interest rates) down to a range of 4.00-4.25%:
Even though this decision was nearly a foregone conclusion, investors still celebrated the news by driving stock prices higher. The S&P 500, Dow Jones and NASDAQ all notched new highs and even the Russell 2000 (an index of small cap stocks) reached its first new all-time high since November of 2021. There are still debates over how many cuts the Fed will make before halting again, but markets are clearly pleased for now.
Back to Business
Now that the long-awaited interest rate cut has arrived, investors turn their attention to more pressing matters. First is economic data: inflation and unemployment will continue to determine the Federal Reserve’s interest rate policy. The Fed typically cuts rates when inflation is low or when unemployment is rising; inflation has modestly increased over the last few months while unemployment has also slightly increased. Neither is cause for alarm yet but these will likely drive the market narrative in the short term.
Our next look at inflation comes this Friday in the Personal Consumption Expenditures (PCE) report for the month of August. This is the Federal Reserve’s preferred measure of inflation and analysts will be parsing the data closely for clues as to any impacts from President Trump’s tariff plans.
Next up is (yet another) potential government shutdown. The federal government is set to shut down on September 30th unless Congress can agree to a deal, and currently the two sides seem far apart. President Trump was scheduled to negotiate with lead Democrats yesterday but canceled negotiations, saying he did not believe the meeting would be productive. With only six days left until the shutdown, markets may become jittery if no progress is made.
What Else
- President Trump proposed a fee of $100,000 on new H1-B visas, a visa specifically for hiring college-educated foreign workers
- The U.N. General Assembly commences this week in New York City
- Canada, the UK and Australia all officially recognized Palestine as an independent nation
- The European Union announced a new package of sanctions against Russia, specifically targeting Russian liquefied natural gas
- Oklahoma State fired head coach Mike Gundy after 20 full seasons as coach; Gundy leaves as the winningest coach in OSU history
What We’re Reading
NASA has announced its newest class of astronauts, the 24th such class in NASA’s history. This class features ten candidates with specialties in geology, test flights, engineering and more. The class will undergo two years of training to become eligible for spaceflight; click below to meet the astronauts:
What’s Happening Downtown
Fourth Fridays returns to the West Village District this Friday, September 26th from 6:00-10:00 PM. This event is free to attend and features a bounce house for children, live music throughout the district, “aerial performances” and discounts from local restaurants and vendors. Click below to learn more:
To read more from our blog, click here
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
Sources: [1] CNBC