Stocks sold off modestly during what is historically a weak period (mid-September through mid-October). We would also consider this non-actionable as September is also historically weak. However, thus far, the S&P has risen 2.84%. Nonetheless, we would expect some choppiness and perhaps further rotation from what has worked thus far during 2025 to what has not. We also think, all things being equal, the set-up is positive as we enter the fourth quarter of 2025. That said, keep an eye on the Trump Administration, as we all know, both right and left, that he can be unpredictable.
- Tax-Loss harvesting should ramp up as we move through the fourth quarter. For those looking to catch a falling knife by purchasing a stock that has meaningfully declined, a word of caution. For investors in non-qualified accounts, they may be selling these securities to offset gains by realizing losses, thus artificially pushing these securities lower. At this time of year, it pays to either wait until late December or dollar cost average into stocks well off their highs just in case.
- Shares of CarMax (KMX) fell more than 20% on Thursday after posting weak quarterly earnings. According to CarMAX CEO Bill Nash, “for the quarter, each month was down year-over-year, and each month got a little weaker throughout the quarter.” FYI, CarMax is the largest used-car retailer in the United States.
- President Trump posted on the social media platform Truth Social that “starting October 1st, 2025, we will be imposing a 100% Tariff on any branded or patented Pharmaceutical Product, unless a Company IS BUILDING their Pharmaceutical Manufacturing Plant in America.” It is unclear if those companies intending to build in America will be exempt.
- Ken Griffin, CEO of Citadel Securities and considered politically somewhat right of center warned the Trump Administration that, in his opinion, “when the state becomes involved in picking winners and losers, there’s only one way this game ends: All of us lose.” Griffin was referring to the U.S. Government making deals with large corporations to avoid the full extent of its tariff policies.
It’s The Economy…”
- The Bureau of Economic Analysis reported that Personal Income rose 0.4% during August (5.1% y/y), after edging 0.4% higher during July. Disposable Personal Income(personal income less taxes) rose 0.4% (4.7% y/y), after rising a like amount during July. Adjusted for inflation, disposable personal income rose 0.1% in August (2.3% y/y) after rising 0.2% in July. The Wage & Salary Component rose 0.3% in August (4.9% y/y), after rising 0.5% in July. Personal Consumption Expenditures (PCE), representing approximately 70% of economic activity, rose 0.6% during August (5.6% y/y) after rising 0.5% during July. Personal Savings(Disposable Personal Income Less Outlays) inched up to an annualized rate of 4.6% during August from 4.4% when compared to July. The Fed’s favorite gauge of inflation, the PCE Chain Price Index rose 0.3% in August (2.7% y/y) after rising 0.2% during July. Excluding food and energy, the Core PCE rose 0.2% during August (2.9% y/y), matching the gain recorded during July. (Source, Bureau of Economic Analysis)
- The University of Michigan reported that its Final September Reading of Consumer Sentiment fell to 55.1 (-5.3% y/y) from a mid-September 55.4 as well as from a final August 58.2. The final September expectations component fell to 51.7 (-30.5% y/y) from a preliminary September 51.8 as well as from a final August 55.9. Lastly, the final September current conditions component slid to 60.4 (-4.6% y/y) from a preliminary September 61.2 and from a final August 61.7. According to the Survey of Consumers Director, Joanne Hsu, “consumer sentiment confirmed its early-month reading and eased about 5% from last month but remains above the low readings seen in April and May of this year. Although September’s decline was relatively modest, it was still seen across a broad swath of the population, across groups by age, income and education, and all five index components. A key exception: sentiment for consumers with larger stock holdings held steady in September, while for those with smaller or no holdings, sentiment decreased.”(Source, Univ of Michigan)
- Sales of Existing Homes slipped 0.2% to a Seasonally Adjusted Annualized Rate (SAAR) of 4.00 million units during August from 4.01 million during July (1.8% y/y). According to the National Association of Realtors (NAR) total housing inventory at the end of August was 1.53 million units, down 1.29% from July (11.7% y/y). Unsold inventory sits at a 4.6-month supply at the current sales pace, identical to the prior month, but up from a low of 1.6 months in January 2022. The report also noted that the median price for all existing homes fell 0.7% to $422,600 in August (2.0% y/y) from a record $425,700, and in so doing ended five straight months of increases. (Source, National Association of Realtors)
- Initial Claims for Unemployment Benefits for the week ended September 20th fell 14,000 to 218,000 from 232,000, which was revised up by 1,000. The four-week rolling average fell 2,750 to 237,500 from 240,250, which revised 250 higher. Continuing claims for the week-ended September 13th fell 2,000 to 1,920,000 from 1,926,000 the prior week, which was revised 8,000 higher. The continuing claims four-week average fell 4,500 to 1,930,000 from 1,934,500. (Source, U.S. Department of Labor)
- Second Quarter Gross Domestic Product (second revision), as reported by the Commerce Department, a tally of the output of all goods and services in the United States, rose at an annualized rate of 3.8% (2.1% y/y), up from an initial revision of 3.3% and after declining 0.5% during Q1. Final Sales to Domestic Purchasers rose at a revised annual rate of 2.4% (2.6% y/y), up from an initial revision of 1.6% and after climbing 1.5% during Q1. Government Spending (Government Consumption Expenditures and Gross Investment) slipped 0.1% (1.9% y/y) during Q2, revised from -0.2% and after dropping 0.6% during the first quarter. Inventory Effect (line 40) subtracted a revised 3.44% from Q2 GDP, more than the prior revision of 3.29% and after adding 2.59% during Q1. The GDP Chain Price Index rose a revised (SAAR) of 2.1% (2.5% y/y) during Q2, after rising 3.8%in Q1. The PCE Price Index Excluding Food and Energy rose an unrevised (SAAR) of 2.5% (2.7% y/y) during Q2 after rising 3.5% during the first quarter. (Source, U.S. Bureau of Economic Analysis)
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 Construction Spending; on Thursday, the Weekly Report of Initial Claims for Unemployment Benefits along with August Factory Orders; and, on Friday September Nonfarm Payrolls and the September Unemployment Rate.
Several companies of note are scheduled to report quarterly earnings this week, to include Carnival (CCL), Vail Resorts (MTN), Nike (NKE),, Paychex (PAYX), Levi Strauss (LEVI), Conagra Brands (CAG) and Cal-Maine Foods (CALM).