September Market Recap
Neither the threat of a US government shutdown, elevated valuations, or a traditionally weak month for equities could prevent stocks from rising higher in September.
Boosted by the Federal Reserve’s first interest rate cut of 2025, the S&P 500 posted its fifth straight month of gains. It is now six positive months in a row for the NASDAQ. Both benchmarks had their best September performances in over a decade.
Seven of the 11 sectors in the S&P 500 moved higher last month. Technology (+7.2%) and Communication Services (+5.5%) were familiar names at the top of the leaderboard. Of the four sectors that finished negative, Materials (-2.3%) and Consumer Staples (-1.8%) fell the most.
Benchmark Returns: September 2025 | YTD 2025
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Dow Jones
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S&P 500
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NASDAQ
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+1.87% | +9.06%
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+3.53% | +13.72%
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+5.61% | +17.34%
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|---|
September began with expectations that the Fed would deliver its first rate-cut of the year and begin the next cycle of looser monetary policy. Fed Chair Jerome Powell fulfilled those expectations on September 17 by announcing a 0.25% cut to the Fed Funds rate. Only one of 12 Fed Governors voted against the cut. In his post-meeting statements, Powell said that “jobs gains have slowed” and “downside risks to employment have risen.” At least one, if not two more 0.25% cuts are expected before year-end.
Given how widely anticipated the decision had been, stock prices remained steady in the days immediately before and after the cut. The S&P 500 gained 2.3% from Sept. 1 thru Sept. 16, then just over 1% in the remainder of the month.
The jobs data Powell referred to does seem to justify a dose of stimulus. Private employers cut around 32,000 jobs in September, the most in 2 ½ years. 22,000 US jobs were created in August, but that was far below consensus expectations of 75,000. The unemployment rate nationally increased to 4.3%, the highest since 2021. Jobs data from June was also adjusted downward to reflect a net loss of 13,000 jobs, the first monthly decline since 2020 (during the COVID-19 pandemic).
With rates headed lower, mortgage rates have begun to fall. Early in September, the interest rate on 30-year fixed mortgage loans dropped below 6.5% for the first time in 11 months. 15-year fixed loans fell below 5.5%. Ten-year US Treasury yields also declined, finishing the month at 4.15% (compared to 4.23% at the end of August).
Another widely anticipated event occurred at 12:01 a.m. October 1 when the US federal government officially shutdown because lawmakers failed to reach agreement on raising the national debt ceiling. Unfortunately, this type of dysfunction has become entirely normalized in Washington. While many government services (and employees) will no doubt be disrupted, US equity markets tolerate shutdowns better than they used to. The longer the shutdown continues, however, the more volatility it is likely to produce.
US economic growth from the second quarter (April thru June) was again revised higher by the Commerce Department to show 3.8% annualized growth. That’s up from 3.0% in the initial estimate (in July) and 3.3% in the first revision (in August).
Despite those numbers and the market’s recent gains, consumers have a worsening view of the economy. The latest University of Michigan Consumer Sentiment index fell roughly 5% from a month earlier. Most participants cited concerns about inflationary pressures and jobs weakness. It’s the third consecutive month in which sentiment has worsened.
Small-cap stocks performed in-line with large-caps in September as indicated by the Russell 2000’s 3% monthly gain. Non-US Developed equities also did fine (+2.1%) but it was Emerging Market equities (+7.1%) that shone brightest, thanks in part to the US dollar weakening against EM currencies.
Ben Marks
Chief Investment Officer
Brett Angel
Senior Wealth Advisor
Investment Advice offered through Marks Group Wealth Management, a Registered Investment Advisor.
Marks Group Wealth Management performs in-house analysis on companies. Statistical information on mentioned companies is obtained from company reports, news releases and SEC filings. The information set forth herein has been derived from sources believed to be reliable, but is not guaranteed as to accuracy and does not purport to be a complete analysis of the securities, companies or industries involved. Opinions expressed herein are subject to change without notice. Additional information is available upon request.
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Stock investing involves market risk including loss of principal. Bonds are subject to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rates rise. International and emerging market investing involves special risks such as currency fluctuation and political instability. These risks are often heightened for investments in emerging markets. No strategy assures success or protects against loss. Because of their narrow focus, sector investing will be subject to greater volatility than investing more broadly across many sectors and companies.
Past performance is no guarantee of future results. All indices are unmanaged and may not be invested into directly.
The Standard & Poor’s 500 Index is a capitalization weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.
The NASDAQ Composite Index measures all NASDAQ domestic and non-U.S. based common stocks listed on The NASDAQ Stock Market. The market value, the last sale price multiplied by total shares outstanding, is calculated throughout the trading day, and is related to the total value of the Index.
The Dow Jones Industrial Average is comprised of 30 stocks that are major factors in their industries and widely held by individuals and institutional investors.
Russell 1000 Growth Index measures the performance of those Russell 1000 companies with higher price to-book ratios and higher forecasted growth values.
Russell 1000 Value Index measures the performance of those Russell 1000 companies with lower price-to-book ratios and lower forecasted growth values.
The Russell 2000 Index is an unmanaged index generally representative of the 2,000 smallest companies in the Russell Index, which represents approximately 10% of the total market capitalization of the Russell 3000 Index.
MSCI EAFE Index consists of the following developed market country indices: Australia, Austria, Belgium, Denmark, Finland, France, Germany, Hong Kong, Ireland, Israel, Italy, Japan, the Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden, Switzerland, and the United Kingdom.
The MSCI Emerging Markets Index is a free float-adjusted market capitalization index that is designed to measure equity market performance of emerging markets.
VIX-The Chicago Board Options Exchange’s CBOE Volatility Index, a popular measure of the stock market’s expectation of volatility based on S&P 500 index options. It is calculated and disseminated on a real-time basis by the CBOE, and is often referred to as the fear index or fear gauge.
