Weekly Newsletter September 22nd to September 26th
RECAPPING LAST WEEK
All U.S. equity indices hit record highs last Monday, with momentum fueled by NVDA’s $100B data center investment with OpenAI. Gains faded after Fed Chair Powell flagged stock valuations and second quarter GDP was revised up to 3.8%, tempering expectations for two more rate cuts this year. Major indices ended the week modestly lower, falling less than 1% each. Metals advanced further, with gold rising 2% and silver rocketing higher by more than 7%. Only the energy and utilities sectors managed to stay positive, rising 4% and 2% respectively. The energy rally was supported by surging oil prices amid reduced Russian exports and multiple Ukrainian drone attacks on Russia’s energy infrastructure. U.S. economic data was mixed. Business activity slowed for a second straight month, with S&P Global’s flash composite PMI easing to 53.6 in September, dragged by weaker manufacturing and services. Firms flagged tariffs as the main driver of higher input prices, but weak demand limited their ability to pass through costs. New home sales surged 20.5% in August, the best result in 3 years, but existing home sales were flat. Median home prices increase 2% YoY which appears to be largely a result of investors’ influence--28% of sales were all-cash. Durable goods orders rose 2.9% in August and the goods trade deficit narrowed sharply to $85.5B. Jobless claims came in below expectations at 218k, but continuing claims remained elevated, signaling longer unemployment spells. Inflation held steady with Fridays Core PCE at 2.9%, but expectations are for that to turn higher, with 1-year expectations up to 4.7% helping pull consumer sentiment down to 55.1 from 55.4. Globally, Germany’s flash PMI improved to 52.4, the best result in 16 months, while its business climate index softened to 87.7. The U.K. PMI dipped to 51 amid higher labor and energy costs. In Asia, China held rates steady, Japan’s CPI was flat at 2.5% YoY, and Australia’s CPI rose to 3.0%, leading to doubts that the country would see easing in the near term.
THE WEEK AHEAD
Markets enter October with the focus squarely on the labor market. JOLTS on Tuesday, ADP on Wednesday, nonfarm payrolls, unemployment, and wage data on Friday will set the tone for Fed policy expectations. Inflation remains a central theme. This week’s ISM Manufacturing and Services PMIs will be closely watched for price pressures, while global PMIs from Europe and China are expected to highlight diverging growth trends. Consumer sentiment and wage data may offer clues to how much higher costs are affecting demand. Commodity markets could see added volatility after Wednesday’s OPEC meeting, where any signal on supply cuts would feed into inflation expectations. Other factors to watch include U.S. Treasury auctions across the curve and the upcoming Q3 earnings season, beginning with major banks. Fed commentary and geopolitical developments remain potential swing factors. Together, these events may drive sharp moves across equities, interest rates, and commodities as investors reposition around data and policy risk.
CHART OF THE WEEK
Seasonal anticipation
Seasonal moves in the stock market can often be linked to recurring underlying factors. One way to view these tendencies is through a seasonal chart of the S&P 500 (SPX). By comparing the index’s performance over the past five years (2021-2024), we can see how recent movements align with historical trends. Each year is shown individually: the darker-shaded red line illustrates the average from these years, while the turquoise line shows 2025 SPX performance year-to-date (YTD). Historically, SPX has tended to show seasonal weakness in February/March then again in September. However, this September has so far defied the historical trend. It’s important to note that seasonality reflects long-term averages, not precise forecasts. While seasonality is a historical average of how the S&P 500 tends to perform throughout the year, a study of this nature shouldn’t be interpreted as providing an accurate forecast of what will happen this year. But historically, Q4 tends to be quite strong.
Source: Charles Schwab Corporation
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