Weekly Market Update – September 12, 2025

Quick Takes

• Global equities extended their gains as the S&P 500 Index rallied to its 24th all-time high in 2025 on the way to a +1.6% week gain. The tech-heavy Nasdaq Composite Index made its 25th record high of the year and ended the week up +2.0%.
• The August Producer Price Index (PPI), a measure of wholesale inflation, unexpectedly fell for the month of August at both the headline and core levels and also decelerated on a year-over-year basis. Core CPI was steady on a monthly and annual basis as well.
• Bond yields were mixed, with short yields rising ahead of the anticipated Fed rate cut on September 17, but the 10-year and 30-year Treasury yields declined. With bond yields mostly down, the Bloomberg U.S. Aggregate Bond Index returned +0.4% over the week.

Source: Bloomberg. Data as of September 12, 2025.
Price Returns for Equity, Total Returns for Bonds.
* The term basis points (bps) refers to a common unit of measure for interest rates and other percentages in finance. One basis point is equal to 0.01%. Bond prices and bond yields are inversely related. As the price of a bond goes up, the yield decreases.

Stocks Continue Their Record Run, Bonds Rally Too

Major equity indices reached new record closing levels again last week. On Thursday, the S&P 500 Index and Nasdaq Composite Index closed at their 24th all-time high of the year. And though the S&P slipped fractionally on Friday, the technology-heavy Nasdaq was able to extend its record rise to a 25th all-time high. Both indexes are up at least 12% year-to-date. The small cap Russell 2000 Index was up marginally for the week, with a +0.3% gain, ending its four-week streak of beating the large cap S&P 500. The Russell is up +7.5% in 2025. 

Overseas equities also continue to power along. The MSCI EAFE Index (developed market non-U.S. stocks) advanced +1.1% last week after edging up +0.2 the prior week. European stocks gained despite the European Central Bank (ECB) holding its key deposit rate at 2%, as expected. Japanese equities were up despite Japanese Prime Minister Shigeru Ishida resigning last week after the party’s loss of both houses of Japan’s parliament. The MSCI Emerging Markets Index outperformed the EAFE for a second straight week, jumping +3.9% for the week after rising +1.4% the previous week. 

Key inflation data in the US boosted investor expectations for a Federal Reserve interest rate cut this Wednesday. Last Wednesday, the August Producer Price Index (PPI), a measure of wholesale inflation, unexpectedly fell for the month of August at both the headline and core (which removes the food and energy items) levels. The readings also decelerated on a year-over-year basis from the annual rate reported in July. A day later, on Thursday, the August headline Consumer Price Index (CPI) came in slightly hotter than expected. However, the Core CPI was unchanged for both the month-over-month and year-over-year periods from the July levels. Aside from inflation data, on Friday the University of Michigan reported that their Consumer-Sentiment Index unexpectedly sank to a four-month low. The CME FedWatch tool shows futures markets are all but convinced that the Fed’s monetary policy committee will deliver a quarter point (25 basis point) rate cut at the conclusion of their meeting this week, followed by two more 25-basis point cuts in October and December.

Also helping fuel stocks are continued strong prospects for earnings and growth in artificial intelligence (AI). The Magnificent Seven group of mega-tech companies (Amazon.com, Alphabet, Apple, Meta Platforms, Microsoft, Nvidia, and Tesla) exceeded the $20 trillion market-cap milestone for the first time on record. Some have suggested the need to extend the Magnificent Seven moniker to the Cloud Nine to incorporate tech companies Broadcom and Oracle. Oracle earnings made headlines this week after the cloud software company missed quarterly top- and bottom-line estimates and kept its forecast unchanged. Despite that, shares surged more than +35% last week because the key metric, Remaining Performance Obligations (RPO), captured investors’ attention. RPO, or the value of committed revenue from signed contracts that has not been recognized as revenue yet, more than quadrupled with analysts calling it a sign of confidence in the company’s capabilities. Broadcom – which designs, develops, and supplies semiconductors and infrastructure software solutions – didn’t even have earning or revenue news to ignite it. On Wednesday, they announced new incentives for its CEO based on aggressive AI revenue targets and that set its stock soaring +10%.

Bonds rallied following the inflation data Wednesday and Thursday, and momentarily pushed the 10-year U.S. Treasury note yield below 4% for the first time since the post-Liberation Day market meltdown in April. The 10-year yield ended the week down just -1 basis point to 4.06%. The 2-year Treasury yield rose +5 basis points to 3.56% and the 30-year yield was down -8 basis points to 4.68%. Bond prices move in the opposite direction of yields. The Bloomberg U.S. Aggregate Bond Index returned +0.4% over the week, and the Bloomberg Global Aggregate ex U.S. Bond Index (non-U.S. bonds) returns were essentially flat at +0.02% for the week.

Chart of the Week

A bit of a data confidence crisis is developing at the Bureau of Labor Statistics (BLS). Based on preliminary revisions released on September 9, the BLS eliminated over 40% of the nonfarm payrolls originally reported as “added” to the US economy in 2024. In other words, 911,000 jobs reported as being added to the US economy over the past 12 months were just revised out of existence. This was the largest revision in history, exceeding the -902,000 12-month revision in 2009 following the Global Financial Crisis. That reduces total employment gains for the 12 months ending in March to about 850,000, compared with the 1.8 million originally reported. On a seasonally adjusted basis, average monthly job growth dropped from about 147,000 in the original numbers to just about 71,000 with the revisions. The downward adjustment spread across nearly every industry and across most US states. Wholesale and retail trade accounted for the largest share of the revision, followed by leisure and hospitality, professional and business services, and manufacturing. This BLS announcement marks the second consecutive unusually large benchmark revision. In February, the BLS lowered its estimate of job growth for the 12 months through March 2024 by nearly -600,000. This latest revision will be finalized and incorporated into official statistics in February 2026.

Monthly Change in Nonfarm Payrolls

Pre- and Post-Revision Data

Source: U.S. Bureau of Labor Statistics, Charles Schwab, Bloomberg.

The Week Ahead

This week, all eyes will be on the Federal Reserve come Wednesday, when the Federal Open Market Committee is expected to cut interest rates at the conclusion of its monetary policy meeting. Despite inflation running above the Fed’s 2% target, a soft labor market all but assures an interest-rate cut, with futures pricing currently implying a 94% chance of a quarter-point cut. Investors will be looking for clues from Fed Chairman Jerome Powell on how many more rate cuts can be expected through the end of the year and into next year. It will be a busy week for other global central banks as well, with Canada, Norway, the United Kingdom, and Japan announcing their monetary-policy decisions. Last week, the European Central Bank left rates unchanged at 2%.

Beyond central bank activity, economic data to be released this week is heavy on housing data with homebuilder confidence (the NAHB Housing Market Index) on Tuesday, plus weekly MBA Mortgage Applications and Housing Starts & Building Permits on Wednesday. Other reports include the Census Bureau’s release of Retail Sales data on Tuesday and the Conference Board’s report on Leading Economic Indicators (LEI) on Thursday.

Did You Know?

BUYBACK BONANZA – Total announced stock buybacks this year crossed the trillion-dollar threshold at the fastest ever pace on August 20, surpassing last year’s record, when it happened on October 16. Corporate demand from buybacks has averaged $4.4 billion per day this year, and July’s monthly total of $166 billion was a record. (Source: MarketWatch)

DIVIDEND YIELD DROPS – On August 13, the S&P 500’s dividend yield dipped below 1.2% for the first time since May 22, 2001. As the high-growth technology sector has become the dominant force in US large-caps, the market’s dividend yield has plunged. From 1970 to 1990, the S&P 500’s dividend yield averaged over 4%, but since 1990 it has averaged 2%. (Source: Bloomberg).

RATE RELIEF – Bankrate’s 30-year fixed national average mortgage rate saw three straight months of declines from June through August, falling from 7.06% on May 28 down to 6.61% by Labor Day. Mortgage rates are now down -80 basis points from 2025’s high of 7.41% on January 13. (Source: Bankrate)

This Week in History

HAMILTON – On September 11, 1789, Alexander Hamilton was sworn in as the United States’ first Secretary of the Treasury. (Source: The Wall Street Journal)

Economic Review

• August wholesale inflation was on the light side with the headline Producer Price Index (PPI) down -0.1% for the month, well below expectations for a +0.3% increase and the prior month’s +0.7% reading (revised lower from +0.9%). Year-over-year (YoY) PPI increased at a +2.6% rate, below expectations for +3.3%, and was down from the prior month’s +3.1% annual rate (revised lower from +3.3%). Core PPI, which strips out volatile food and energy costs, was also down -0.1% for the month, compared to expectations for a +0.3% rise, and down sharply from a +0.7% reading the prior month (revised lower from +0.9%). YoY Core PPI was up +2.8%, lower than expectations for +3.5% and down from the prior month’s +3.4% annual rate (unrevised). The index for final demand goods was up +0.1% versus the index for final demand services, which fell -0.2%, compared to gains of +0.6% and +0.7% respectively, the prior month. The report was very favorable for increased odds of rate cuts by the Fed.
• The rate of inflation for consumer goods and services rose again in August, as the headline Consumer Price Index (CPI) was up +0.4% for the month, more than the +0.3% Wall Street expected. That was up from an unrevised +0.2% increase the prior month. Year-over-year (YoY), CPI was +2.9%, in line with expectations and up from the prior month’s unrevised +2.7% annual rate. Core CPI, which excludes the more volatile food and energy prices, increased +0.3% for the month, matching expectations and the prior month. YoY Core CPI was +3.1%, also matching expectations and the prior month. The food index rose +0.5% for the month and +3.2% year-over-year. Shelter, which is about one-third of the CPI weighting, was up +0.4% for the month and +3.6% from last year. The bottom line is that food and shelter increases remain elevated, but that expectations for a Fed cut weren’t affected by the release. 
• The preliminary reading of the September University of Michigan Consumer Sentiment Index sank to 55.4 from 58.2 the prior month. That fell well short of expectations to dip to 58.0. In the same period a year ago, the index stood at 70.1. The Current Economic Conditions component dropped to 61.2 from 61.7 the prior month and 63.3 a year ago. The Consumer Expectations component was down to 51.8 from 55.9 the prior month and 74.4 a year ago. One-year inflation expectations were unchanged at 4.8%. The five-year inflation expectations rose to 3.9% from 3.5% the prior month. The bottom line is that sentiment is fading, particularly from expectations of lower-income and middle-income consumers. 
• The National Federation of Independent Business (NFIB) reported that their Small Business Optimism Index improved to 100.8 from an unrevised 100.3 the prior month. That was ahead of Wall Street expectations for 100.5. Of the 10 component indexes, four increased, four declined, and two were unchanged. The improvements were led by Expect Real Sales Higher, which improved +6 points to a net +12%, as well as Earnings Trends and Current Inventory, which each increased +3 points. Now a Good Time to Expand and Expect Economy to Improve were both down -2 points, while Plans to Make Capital Outlays and Current Job Openings each slipped -1 point. “Optimism increased slightly in August with more owners reporting stronger sales expectations and improved earnings,” said NFIB Chief Economist Bill Dunkelberg. “While owners have cited an improvement in overall business health, labor quality remained the top issue on Main Street.” 
• Outstanding U.S. Consumer Credit increased by +$16.01 billion in July, far above expectations for +$10.35 billion, and up from $9.613 the prior month (revised up from the initially reported +$7.371 billion). That amounts to a +3.8% annual growth rate for the month, up from the +2.3% annualized growth rate the prior month. Growth for revolving credit, such as credit cards, jumped +9.7% for the month, the largest jump since January 2024, and up from the prior month’s +0.7% rate. Nonrevolving credit, which tends to be much less volatile than revolving credit and includes auto as well as school loans, rose at a +1.8% rate following the prior month’s +2.8% increase. The data from the Federal Reserve is not adjusted for inflation and does not include mortgage loans, which is the largest category of household debt. The pickup in borrowing coincides with stronger household spending in July, partly reflecting increased sales at online retailers and furniture stores. In addition, auto sales in July climbed to a three-month high, according to Wards Automotive Group data.
• The U.S. Treasury Department recorded a surprise Federal Budget Deficit of -$344.8 billion in August compared to a deficit of -$380.1 billion in the same period a year ago. Wall Street was expecting a -$340.0 billion deficit. Receipts rose +0.4% (to $344.3 billion) on a year-ago basis, while Outlays increased 9.3% (to $689.1 billion) to reach a cumulative budget deficit for the first 10 months of fiscal 2025 of -$1.973 trillion, +4.0% higher than in the same period in fiscal 2024 ($1.897 trillion). The bottom line from the report is that after a surprise surplus in June, the Federal Budget returned to a deficit in July and August despite receipts rising from tariffs by a year-to-date total to $165 billion.
• U.S. Household Net Worth jumped +$7.1 trillion (+4.2%) to $176.3 trillion following a -$1.7 trillion drop in the first quarter (revised down from -$1.6 trillion). Household Liabilities rose to $20.987 trillion from $20.804 trillion the prior quarter. The Household Debt-to-Asset ratio was down -0.3% to 10.64%, just above the lowest level since 1973. Prospects for the third quarter are better as equity prices have rallied to fresh all-time highs.
• Weekly MBA Mortgage Applications jumped +9.2% for the week ending September 5, following a -1.2% slide the prior week. The Purchase Index was up +6.6% after falling -3.1% the prior week. The Refinance Index surged +12.2% after a +0.9% bump the prior week. The average 30-Year Mortgage Rate slipped to 6.49% from 6.64% the prior week, the lowest since October 4.
• Weekly Initial Jobless Claims rose +23,000 to 263,000 for the week ending September 6, worse than expectations for 235,0000. The prior week was revised down -1,000 to 236,000. The number of people already collecting unemployment claims (i.e., Continuing Claims) was unchanged at 1,939,000 for the week ending August 29 after the prior week’s reading was revised lower by -1,000. That was better than expectations for 1,950,000.

Asset Class Performance

Source: Bloomberg.
Asset‐class performance is presented by using market returns from an exchange‐traded fund (ETF) proxy that best represents its respective broad asset class. Returns shown are net of fund fees for and do not necessarily represent performance of specific mutual funds and/or exchange-traded funds recommended by The Retirement Planning Group. The performance of those funds may be substantially different from the performance of the broad asset classes and to proxy ETFs represented here. US Bonds (iShares Core US Aggregate Bond ETF); High‐Yield Bond (iShares iBoxx $ High Yield Corporate Bond ETF); Intl Bonds (Vanguard Total International Bond ETF); Large Growth (iShares Russell 1000 Growth ETF); Large Value (iShares Russell 1000 Value ETF); Mid Growth (iShares Russell Mid-Cap Growth ETF); Mid Value (iShares Russell Mid-Cap Value ETF); Small Growth (iShares Russell 2000 Growth ETF); Small Value (iShares Russell 2000 Value ETF); Intl Equity (iShares MSCI EAFE ETF); Emg Markets (iShares MSCI Emerging Markets ETF); and Real Estate (iShares US Real Estate ETF). The return displayed as “Allocation” is a weighted average of the ETF proxies shown as represented by 24% US Bonds, 10% International Bonds, 6% High Yield Bonds, 13.8% Large Growth, 13.8% Large Value, 3.6% Mid Growth, 3.6% Mid Value, 1.2% Small Growth, 1.2% Small Value, 16.8% International Stock, 4.2% Emerging Markets, 1.8% Real Estate.
* The term basis points (bps) refers to a common unit of measure for interest rates and other percentages in finance. One basis point is equal to 0.01%. Bond prices and bond yields are inversely related. As the price of a bond goes up, the yield decreases.