Large cap stocks once again pushed higher this week with all the major indexes (Dow Jones Industrial Average, S&P 500, US Total Market Index, NASDAQ Composite) finishing the week at record highs. In fact, on Thursday, even the mid-cap Russell 200 notched its first record closing high since November 8, 2021. Investors stepped in to purchase shares of these comparatively smaller companies as they tend to borrow at the short end of the yield curve, an area most affected by Fed action, which appears to be in an easing mode if this past week is any indication and we believe that it is. Despite being historically a soft month for stocks, with only one week of trading remaining, September has turned out to be a positive month, which bodes well for the balance of this calendar year.
- Shortly after concluding its regularly scheduled two-day meeting on Wednesday, the Open Market Committee of the Federal Reserve (FOMC), the body that determines monetary policy decided to bring its key lending tool, the Federal Funds Rate down by 0.25% to 4.00%. Of the twelve voting members, excluding Fed Chair Jerome Powell, eleven agreed with the move, including Christopher Waller, purportedly on the short-list to succeed Powell when his term expires in May 2026. Another potential successor, recently appointed Stephen Miran was the lone dissenter, who preferred lowering the target rate by 0.50%. Within the statement the Fed noted that “uncertainty about the economic outlook remains elevated. The Committee is attentive to the risks of both sides of its dual mandate and judges that downside risks to employment have risen.”
- Shares of Intel surged more than 20% this past week after Nvidia (NVDA) announced that it would invest $5 billion in the chipmaker to together develop data centers and PC chips. Coincidentally, on August 22, the Federal Government took a 10% stake in Intel at $20.47 and shortly thereafter granted Nvidia certain export licenses to China in return for 15% of the revenue generated from these transactions. It is important to note that the stake that the U.S. Government took in Intel does not include voting rights or a seat on the Board of Directors. Shares of Intel closed the week at $29.58 per share.
- Where will it end up? According to recent data from the Federal Reserve, $7.458 trillion of cash is currently parked in money market funds. As short-term rates drop, it will be interesting to see what portfolio adjustments, if any, are made as a result. Certainly, some will remain. However, we believe a sizable percentage will chase the recent run-up in stocks while others will move further out the yield curve. Both make sense if they conform to your long-term investment objectives.
- Mortgage Rates Fall. Recently released data from the Federal Home Loan Mortgage Corporation (FreddieMac) revealed that the average rate on a 15-year mortgage declined to 5.41% while the rate on 30-year mortgages fell to 6.26%. According to Freddie Mac, “mortgage rates decreased again this week, prompting many homeowners to refinance. In fact, the share of mortgage applications that were refinances reached nearly 60%, the highest since January 2022.”
It’s The Economy…”
- Initial Claims for Unemployment Benefits for the week ended September 13th fell 33,000 to 231,000 from 264,000, which was revised up by 1,000. The four-week rolling average fell 750 to 240,000 from 240,750, which revised 250 higher. Continuing claims for the week-ended September 6th fell 7,000 to 1,920,000 from 1,927,000 the prior week, which was revised 12,000 lower. The continuing claims four-week average fell 10,750 to 1,932,500 from 1,942,750. (Source, U.S. Department of Labor)
- The Conference Board reported that its U.S. Index of Leading Economic Indicators slid 0.5% during August, after falling 0.1% during July. The US LEI fell 2.8%over the trailing six months. “In August, the US LEI registered its largest monthly decline since April 2025, signaling more headwinds ahead. Among its components, only stock prices and the Leading Credit Index supported the LEI in August and over the past six months,” this according to Justyna Zabinska-La Monica, Senior Manager, Business Cycle Indicators, at the Conference Board. (Source, The Conference Board)
- Housing Starts fell 8.5% or by 122,000 to a seasonally adjusted annualized rate (SAAR) of 1,307,000 during August as compared to 1,429,000 in July (-6.0% y/y). A study completed by Freddie Mac in 2018 estimates that there must be 1.6 million units build annually to account for household growth and to replace existing stock. During July, Single-family housing starts fell 7.0% or 67,000 to 890,000 from 957,000 (-11.7% y/y). Meanwhile Multifamily housing starts fell 11.7% to 417,000 in August (8.9% y/y) from 472,000 during July. Building Permits, a key barometer for future starts, fell 50,000 to 1,312,000 in August as compared to July (-11.1% y/y). (Source, U.S. Census Bureau)
- Retail Sales rose 0.6% during August (5.0% y/y), after jumping 0.6% in July. Spending on Motor Vehicle & Parts rose 0.5% during August (4.7% y/y) after rising 1.74% in July. Retail Sales Excluding Motor Vehicles & Parts rose 0.7% (4.9% y/y). Two key components of this report, Sales at Gasoline Stations, rose 0.5% during August (-0.7% y/y) after rising 0.9% in July while Food Services and Drinking Place Sales rose 0.7% during August (6.5% y/y) after sliding 0.1% in July. (Source, U.S. Census Bureau)
- U.S. Export Prices rose 0.3% during August (3.4% y/y), after rising 0.3% during July. Import prices rose 0.3% in August (0.0% y/y) after rising 0.2% during July. Agricultural export prices were unchanged during August (5.1% y/y), after falling 0.2% during July. Non-Agricultural Export Prices rose 0.3% during August (3.2% y/y), after rising 0.3% during July.(Source, U.S. Bureau of Labor Statistics)
Economic Reports scheduled to be released this week include the following – on Wednesday, August New Home Sales; on Thursday, the Weekly Report of Initial Claims for Unemployment Benefits, August Orders for Durable Goods and the Second Revision to Second Quarter GDP; and, on Friday August Personal Income and Spending.
Several companies of note are scheduled to report quarterly earnings this week, to include Micron Technology (MU), AutoZone (AZO), Cintas (CTAS), Steelcase (SCS), Uranium Energy (UEC), Costco (COST), Accenture (ACN), Jabil (JBIL) and CarMax (KMX).