Large cap stocks pushed higher as is evidenced by the closing values of the S&P 500, Dow Jones Industrial Average and NASDAQ Composite. However, the midcap Russell 2000 did not fare so well as historically higher interest rates tend to hurt smaller, less capitalized stocks as compared to their large cap brethren. We wouldn’t make too much of the move as until interest rates settle down and we past the midterms, the broader mark should mostly just bide time.
- Chinese President Xi Jinping concluded his first formal trip to Washington DC in more than a decade, meeting with President Trump. Both countries announced that a continuation of dialogue was helpful despite the fact that there were no hard agreements on the War in Iran or how to deal with the risks associated with the development of Artificial Intelligence (AI). That said, Xi did promise to send the U.S. a pair of pandas!
- Interest rates pushed higher this past week as a result of continued stronger than expected economic data, concerns over the stickiness of inflation, competition from publicly traded companies as they issue debt to pay for capital expenditures surrounding the buildout of Artificial Intelligence (AI) and hawkish comments coming from members of the Fed. The yield on the two, five and ten year U.S. Treasury Notes rose from 4.76%, 4.86% and 5.01% to 4.81%, 4.98% and 5.17%, respectfully. We believe that after the recent run-up in rates, they will remain at or around these levels as demand for Treasuries increase.
- According to Mortgage News Daily, the rate on a 30-Year Fixed Rate Mortgage rose to 7.43% this past week. As a point in comparison, earlier this year that same mortgage was just under 6.00%. The difference in rates adds to an increase of $398 per month on a $400,000 mortgage.
- This past Monday the S&P 500 rose more than 1% to close within 1% of a new 52-week high, despite the fact that new lows outnumbered new highs. According to Jason Goepfert, an adviser at NextGen News, the last time that happened was just before the Dotcom Bubble peaked in March 2000. Prior to that you would have to go back more than seventy years to 1929. The breadth of the market has been relatively weak for a few months now, somewhat of a yellow flag, but not a reason to sell positions.
Economic Data That Drove Market Sentiment This Past Week…
- The University of Michigan reported that its Final September Reading of Consumer Sentiment rose to 48.1 (-12.7% y/y) from a preliminary September reading of 47.8 but fell from a final August 51.7. The final September expectations component rose to 46.3 (-01.4% y/y) from a preliminary September 45.8 but fell from a final August 51.5. Lastly, the final September current conditions component held at 50.9 (-15.7% y/y) when compared to the preliminary September reading but fell from a final August 51.9. According to the Survey of Consumers Director, Joanne Hsu, “Consumer sentiment ticked down less than four index points in September, reaching the lowest reading in four months and down 15% from January 2026. Views of current and year-ahead expected personal finances both weakened about 10% this month, with concerns over high prices continuing to climb.” (Source, Univ of Michigan)
- Orders for Durable Goods (those expected to last at least three years) rose 0.0% during August, after rising 0.9% during July. Smoothing out the m/m volatility, Orders for Durable Goods have advanced 7.7% y/y. Transportation Equipment Orders fell 0.6% (4.3% y/y), after rising 1.2% the prior month. Excluding transportation, new orders rose 0.3% during August (9.6% y/y), after rising 0.7% during July. (Source, U.S. Census Bureau)
- The U.S. Census Bureau reported that New Single-Family Home Sales rose 41,000 during August to a Seasonally Adjusted Annualized Rate (SAAR) of 684,000 from 643,000 during June (-2.0% y/y). Sales of New Homes have fallen 33.7% from their peak of 1.031 million in October 2020 and 46.5% from the peak in July 2005 of 1,279,000 units. However, they have risen 31.8% above their July 2022 low of 519,000. The median sales price of a new home rose 0.4% (-5.8% y/y) to $393,700 in August from $392,200 in July, this as the average sales price of a new home fell 9.1% (-8.8% y/y) to $478,700 from $526,400, the lowest since August 2024. The average price is 11.55 below the high of $541,200 in July 2022. These sales prices are not seasonally adjusted. The number of unsold new homes on the market was unchanged at 483,000 (-2.0% y/y). The seasonally adjusted months’ supply of new homes for sale fell to 8.5 months in August from 9.0 in July as the median number of months a new home stayed on the market held at 3.2 months during August, well below the low of 6.9 months in May 2023. (Source, U.S. Census Bureau)
Economic Reports scheduled to be released this week, include the following – on Tuesday, September Consumer Confidence and the Job Openings and Labor Turnover Survey (JOLTS); on Wednesday, August Personal Income and Spending and the Second Revision to Q2 GDP; on Thursday, August Construction Spending, September Manufacturing Purchasing Managers' as well as the Initial Weekly Claims for Unemployment Benefits; and, on Friday, August Factory Orders and the September Non-Farm Payroll Report, Include the Unemployment Data.Several potentially market moving companies are scheduled to report earnings, to include Gilead Sciences (GILD), FirstCash Holdings (FCFS), Valley National Bancorp (VLY), VeriSign (VRSN), Visteon Corp (VC), Valero Energy (VLO), Federated Homes (FHI) and Eagle Materials (EXP).
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Additional information including management fees and expenses is provided on our Form ADV Part 2. The actual return and value of an account fluctuate and, at any time, the account may be worth more or less than the amount invested. Bond Investments are affected by interest rate changes and the credit-worthiness of the issues held in the portfolio. A rise in interest rates will cause a decrease in the value of fixed income positions. Past performance results are not indicative of future results.”
