Tag: inflation

The Markets (as of market close December 19, 2025)

The stock market declined for most of last week, only to rally last Thursday and Friday. The last two weeks have been “catch-up” periods for the economy with the release of a large influx of economic data following the 43-day government shutdown. While last week started with heavy selling, particularly in the tech sector, a cooler-than-expected Consumer Price Index (see below) last Thursday helped drive the market higher. The S&P 500 and the NASDAQ ended the week higher, while the Dow, the Global Dow, and the small caps of the Russell 2000 closed down. Of the 11 S&P 500 market sectors, only consumer discretionary and health care outperformed. The remaining sectors closed the week in the red, with energy falling nearly 4.0%. Crude oil declined for a second straight week with prices falling to their lowest levels in nearly five years, as concerns over a global supply glut and trade tensions outweighed geopolitical risks. Despite unemployment rising (see below), evidence of waning inflationary pressures is leading some analysts to suggest a “Santa Claus” rally (historically occurring over the last five days of December) is in the offing.

Stock Market Indexes

Market/Index	2024 Close	Prior Week	As of 12/19	Weekly Change	YTD Change
DJIA	42,544.22	48,458.05	48,134.89	-0.67%	13.14%
NASDAQ	19,310.79	23,195.17	23,307.62	0.48%	20.70%
S&P 500	5,881.63	6,827.41	6,834.50	0.10%	16.20%
Russell 2000	2,230.16	2,551.46	2,529.42	-0.86%	13.42%
Global Dow	4,863.01	6,139.98	6,132.77	-0.12%	26.11%
fed. funds target rate	4.25%-4.50%	3.50%-3.75%	3.50%-3.75%	0 bps	-75 bps
10-year Treasuries	4.57%	4.19%	4.15%	-4 bps	-42 bps
US Dollar-DXY	108.44	98.40	98.70	0.30%	-8.98%
Crude Oil-CL=F	$71.76	$57.46	$56.55	-1.58%	-21.20%
Gold-GC=F	$2,638.50	$4,333.70	$4,369.00	0.81%	65.59%

Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark performance of specific investments.

Last Week’s Economic News

• There will be no issue of What I’m Watchin This Week for the week ended December 26.
• The latest jobs report showed that the labor market grew by 64,000 in November, in line with most expectations. The change in total employment for August was revised down by 22,000, and the change for September was revised down by 11,000. With these revisions, employment in August and September combined was 33,000 lower than previously reported. The unemployment rate in November, at 4.6%, was 0.2 percentage point above the September rate and 0.4 percentage point above the November 2024 estimate of 4.2%. The total number of unemployed, at 7.8 million, was 700,000 above the estimate from a year earlier. The labor force participation rate was 62.5% last month, while the employment-population ratio was 59.6%. Each of these measures has shown little change over the year. The number of long-term unemployed (those jobless for 27 weeks or more) changed little at 1.9 million in November and accounted for 24.3% of all unemployed people. In November, average hourly earnings edged up by $0.05, or 0.1%, to $36.86 from September. Over the past 12 months, average hourly earnings have increased by 3.5%. The average workweek increased 0.1 hour to 34.3 hours in November.
• The Consumer Price Index (CPI) increased 0.2% over the two months from September 2025 to November 2025. The CPI less food and energy also rose 0.2% over the same two months. From September to November, shelter prices increased 0.2%, energy prices rose 1.1%, and food prices increased 0.1%. Other indexes that increased over the two months ended in November include household furnishings and operations, communication, and personal care. In contrast, the indexes for lodging away from home, recreation, and apparel decreased over the same two-month period. Over the last 12 months, the CPI increased 2.7% after rising 3.0% over the 12 months ended in September. Prices less food and energy rose 2.6% over the last 12 months. Energy prices increased 4.2% for the 12 months ended in November. Prices for food increased 2.6% over the last year. The Bureau of Labor Statistics did not collect survey data for October 2025 due to a lapse in appropriations.
• Advance estimates of U.S. retail and food services sales for October 2025 were $732.6 billion, virtually unchanged from the previous month but up 3.5% from October 2024. Retail trade sales were up 0.1% from September 2025 and 3.4% from last year. Nonstore (online) retailer sales were up 9.0% from last year, while sales at food service and drinking places were up 4.1% from October 2024.
• Existing home sales rose 0.5% in November, according to the National Association of REALTORS®. However, sales dipped 1.0% from a year earlier. Existing home inventory sat at a 4.2-month supply, down from 4.4 months in October but up from 3.8 months in November 2024. The median existing-home price was $409,200 in November, 0.8% under the October price of $412,900 but up 1.2% from the price one year ago ($404,400), which was the 29th consecutive month of year-over-year price increases. Sales of existing single-family homes increased 0.8% in November but were down 0.8% from the total a year earlier. Inventory of existing single-family homes dipped from a supply of 4.3 months in October to 4.0 months in November. The median existing single-family home price was $414,300 in November, down 1.4% from the October estimate of $420,200 but 1.3% higher than the November 2024 price of $409,200.
• For the week ended December 13, there were 224,000 new claims for unemployment insurance, a decrease of 13,000 from the previous week’s level, which was revised up by 1,000. According to the Department of Labor, the advance rate for insured unemployment claims for the week ended December 6 was 1.2%, unchanged from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended December 6 was 1,897,000, an increase of 67,000 from the previous week’s level, which was revised down by 8,000. States and territories with the highest insured unemployment rates for the week ended November 29 were Washington (2.5%), New Jersey (2.4%), California (2.3%), Minnesota (2.2%), Massachusetts (2.1%), Puerto Rico (2.0%), Rhode Island (2.0%), Alaska (1.9%), Oregon (1.9%), Nevada (1.8%), and New York (1.8%). The largest increases in initial claims for unemployment insurance for the week ended December 6 were in California (+14,258), Illinois (+11,074), New York (+10,346), Texas (+8,206), and Georgia (+6,333), while the largest decreases were in Rhode Island (-82), Nebraska (-65), Vermont (-16), and Delaware (-3).
• The national average retail price for regular gasoline was $2.895 per gallon on December 15, $0.045 per gallon below the prior week’s price and $0.121 per gallon less than a year ago. Also, as of December 15, the East Coast price decreased $0.050 to $2.842 per gallon; the Midwest price fell $0.030 to $2.690 per gallon; the Gulf Coast price dropped $0.001 to $2.492 per gallon; the Rocky Mountain price declined $0.097 to $2.547 per gallon; and the West Coast price fell $0.105 to $3.851 per gallon.

Eye on the Week Ahead

Tuesday is a busy day for economic data, headlined by the release of the preliminary estimate of gross domestic product for the third quarter. The Bureau of Economic Analysis is releasing two estimates of third-quarter GDP (the preliminary and final versions) instead of the customary three iterations over three consecutive months. The advance estimate, initially scheduled for an October release, was not provided due to the government shutdown.

The Markets (as of market close November 28, 2025)

November proved to be a volatile month for the stock market, ultimately concluding with slight gains for several of the major market indexes. Through the middle of the month, investors grappled with concerns about the valuation of mega-cap tech stocks, leading most benchmark indexes to decline for three straight weeks. However, the market staged a strong rebound late in the month leading into the Thanksgiving holiday, as more economic information became available following the re-opening of the federal government. The late-month rally was largely driven by renewed hopes for a Federal Reserve interest rate cut in December. Each of the benchmark indexes ultimately ended November on an uptick, except the NASDAQ, which ended the month in the red, despite a strong rally during the last week of the month.

Market volatility was largely driven by the performance of a small number of megacap technology companies, frequently the “Magnificent Seven,” due to their significant weighting in the S&P 500 and the NASDAQ, prompting their collective performance to outpace the broader market.

A major catalyst for the late-month rally was growing investor confidence in a third interest rate cut by the Federal Reserve in early December. Key federal officials have indicated that labor-market risks are a primary concern, increasing the likelihood of a rate cut. Among the market sectors, health care, communication services, energy, and consumer staples outperformed in November, while information technology, consumer discretionary, and industrials lagged.

FactSet’s latest review of third quarter U.S. corporate earnings was generally favorable. Blended year-over-year earnings growth for the S&P 500 was roughly 13.4%, which marked the fourth consecutive quarter of double-digit earnings growth. In addition, 83% of S&P 500 companies reported earnings per share above estimates, well above the 10-year average of 75%.

U.S. Treasury yields in November were on a downward trend, with 10-year Treasuries falling eight basis points, and the yield on two-year Treasuries dipping about five basis points. The decline in yields, particularly the ten-year Treasury note, generally reflects investor expectations of further interest rate cuts as the Federal Reserve attempts to balance rising inflationary pressures against a softer labor market.

Crude oil prices were on track for a fourth consecutive monthly decline. A surge in global supply, particularly from non-OPEC+ producers like the United States and Brazil, has led to a steady increase in crude inventories, which has driven crude oil prices lower. The retail price of regular gasoline was $3.061 per gallon on November 24, $0.026 above the price a month earlier and $0.017 higher than the price a year ago.

Stock Market Indexes

Market/Index	2024 Close	Prior Month	As of 11/28	Monthly Change	YTD Change
DJIA	42,544.22	47,562.87	47,716.42	0.32%	12.16%
NASDAQ	19,310.79	23,724.96	23,365.69	-1.51%	21.00%
S&P 500	5,881.63	6,840.20	6,849.09	0.13%	16.45%
Russell 2000	2,230.16	2,479.38	2,498.78	0.78%	12.04%
Global Dow	4,863.01	6,022.58	6,059.46	0.61%	24.60%
fed. funds target rate	4.25%-4.50%	3.75%-4.00%	3.75%-4.00%	0 bps	-50 bps
10-year Treasuries	4.57%	4.10%	4.02%	-8 bps	-55 bps
US Dollar-DXY	108.44	99.72	99.47	-0.25%	-8.27%
Crude Oil-CL=F	$71.76	$60.88	$59.47	-2.32%	-17.13%
Gold-GC=F	$2,638.50	$4,013.40	$4,249.90	5.89%	61.07%

Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark the performance of specific investments.

Latest Economic Reports

The government shutdown impacted the flow of economic data. However, since the government reopened, some economic reports have been released. The following summaries are based on the most recent data available as of the date of this publication.

• Employment: The latest employment report for September showed the labor market added 119,000 new jobs, which was more than expected. However, employment for July was also revised down by 7,000, while August’s total was revised down by 26,000. With these revisions, employment in July and August combined was 33,000 lower than previously reported. In September, the unemployment rate ticked up 0.1 percentage point to 4.4%. The number of unemployed persons in September, at 7.6 million, was 219,000 above the August estimate. The number of long-term unemployed (those jobless for 27 weeks or more) decreased by 116,000 to 1.8 million. These individuals accounted for 23.7% of all unemployed persons. The labor force participation rate in September rose 0.1 percentage point from August to 62.4%. The employment-population ratio in September, at 59.7%, was 0.1 percentage point above the August figure. Average hourly earnings increased by $0.09, or 0.2%, to $36.67 in September. Over the last 12 months, average hourly earnings rose by 3.8%. The average workweek in September was 34.2 hours for the fourth month in a row.
• There were 216,000 initial claims for unemployment insurance for the week ended November 22, 2025. During the same period, the total number of workers receiving unemployment insurance was 1,960,000. A year ago, there were 216,000 initial claims, while the total number of workers receiving unemployment insurance was 1,892,000.
• FOMC/interest rates: The Federal Reserve did not meet in November. However, the consensus is that the Federal Open Market Committee will cut the fed funds target rate range by 25 basis points when it next meets in December.
• GDP/budget: The economy, as measured by gross domestic product, advanced at an annualized rate of 3.8% in the second quarter, rebounding from a 0.6% decrease in the first quarter of 2025. Consumer spending, as measured by personal consumption expenditures, helped propel the second-quarter increase, climbing 2.5% after ticking up 0.6% in the first quarter. Spending rose for both services (2.6%) and goods (2.2%). After surging 38.0% in the first quarter, imports (which are a negative in the calculation of GDP) fell 29.3% in the second quarter. However, exports also declined in the second quarter, falling 1.8%, offsetting a 0.2% advance in the first quarter. Private investment declined 13.8% in the second quarter, cutting into the 23.3% gain in the prior quarter.
• The federal budget ran a deficit of $284 billion in October, the first month of fiscal year 2026. October receipts were $404 billion. Customs duties (e.g., tariffs) added $31 billion to receipts in October. Government outlays in October were $689 billion. The deficit for fiscal year 2025, at $1,775 billion, was below the $1,817 billion deficit from the previous fiscal year. For October, individual income tax receipts totaled $217 billion, while outlays for Social Security equaled $134 billion.
• Inflation/consumer spending: According to the latest Personal Income and Outlays report, personal income and disposable (after-tax) personal income each rose 0.4% in August after increasing 0.4% and 0.3%, respectively, in July. Consumer spending increased 0.6% in August after rising 0.5% the previous month. In August, the PCE price index rose 0.3% after increasing 0.2% in July. Core prices advanced 0.2% last month, unchanged from the July estimate. The PCE price index rose 2.7% since August 2024, while core prices increased 2.9% over the same period. Over the past 12 months ended in August, prices for goods increased 0.9% and prices for services rose 3.6%. Food prices increased 2.2%, while energy prices decreased 0.1%.
• The Consumer Price Index rose 0.3% in September after increasing 0.4% in August. Over the 12 months ended in September, the CPI rose 3.0%, 0.1 percentage point higher than the 12-month period ended in August. Core prices rose 0.2% in September and 3.0% since September 2024. The primary factor in the September increase was a 1.5% rise in energy prices, which was driven by a 4.1% jump in prices for gasoline. Prices for shelter rose 0.2% in September, while food prices rose 0.2%. Over the last 12 months ended in September, food prices increased 3.1%, energy prices rose 2.8%, and shelter prices advanced 3.6%.
• Prices at the wholesale level have been somewhat unpredictable this year. In September, the Producer Price Index increased 0.3% after declining 0.1% in August. Producer prices increased 2.7% for the 12 months ended in September, the same 12-month increase for the period ended in August. Excluding food and energy, producer prices ticked up 0.1% in September and 2.6% for the year. In September, prices for goods increased 0.9% from the previous month and 3.3% since September 2024. Last month prices for services were unchanged but rose 2.5% for the 12 months ended in September.
• Housing: Sales of existing homes increased 1.2% in October and were up 1.7% year over year. The median existing-home price was $415,200 in October, higher than the September price of $412,300 and above the October 2024 estimate of $406,800. Unsold inventory of existing homes in October represented a 4.4-month supply at the current sales pace, up from 4.5% in September and above the 4.1-month supply from a year ago. Sales of existing single-family homes rose 0.8% in October and 1.9% from the October 2024 figure. The median existing single-family home price was $420,600 in October ($417,600 in September), higher than the October 2024 estimate of $411,700.
• Sales of new single-family homes jumped higher in August, exceeding expectations, although inventory of available new homes for sale plunged lower from the previous month. Sales of new single-family homes rose 20.5% in August and were 15.4% above the August 2024 figure. The median sales price of new single-family houses sold in August was $413,500 ($395,100 in July), which was higher than the August 2024 estimate of $405,800. The August average sales price was $534,100 ($478,200 in July), up from the August 2024 average sales price of $475,600. Inventory of new single-family homes for sale in August represented a supply of 7.4 months at the current sales pace, 17.8% below the July estimate of 9.0 months and 9.8% below the August 2024 estimate of 8.2 months.
• Manufacturing: Industrial production edged up 0.1% in August after decreasing 0.4% in July. Manufacturing output rose 0.2% last month after edging down 0.1% in July. Within manufacturing, the production of motor vehicles and parts increased 2.6% in August, while factory output elsewhere edged up 0.1%. Mining moved up 0.9%, while utilities decreased 2.0%. Total industrial production was up 0.9% since August 2024.
• New orders for durable goods rose 0.5% in September after increasing 3.0% in August. Transportation equipment drove the September increase after climbing 0.4%. New orders excluding transportation increased 0.6%. Excluding defense, new orders increased 0.1%. For the 12 months ended in September, durable goods orders advanced 7.3%.
• Imports and exports: Both import and export prices came in higher than expected in August. Import prices advanced 0.3% following a 0.2% decrease in July. Prices for imports were flat for the 12 months ended in August. Higher prices for nonfuel imports more than offset lower prices for fuel imports in August. Import fuel prices fell 10.1% over the past 12 months. Prices for nonfuel imports advanced 0.4% in August, the largest monthly advance since April 2024. Export prices rose 0.3% in August after rising 0.1% the previous month. Export prices increased 3.4% over the past 12 months, the largest 12-month increase since December 2022.
• The international trade in goods deficit for August was $85.5 billion, 16.8% under the July estimate. Exports of goods for August dipped 1.3%, while imports of goods declined 7.0%. Over the 12 months ended in August, exports decreased 0.4% and imports fell 4.1%.
• The latest information on international trade in goods and services, released November 19, saw the goods and services deficit decrease 23.8% in August to $59.6 billion. Exports of goods increased 0.1% to $280.8 billion in August. Imports of goods fell 5.1% to $340.4 billion. For the 12 months ended in August 2025, the goods and services deficit increased $142.5 billion, or 25.0%, from the same period in 2024. Exports increased $108.4 billion, or 5.1%. Imports increased $250.9 billion, or 9.2%.
• International markets: Both in Europe and Asia, November may best be characterized by moderately positive stock market momentum, largely driven by growing expectations of an interest rate cut by the U.S. Federal Reserve. The eurozone GDP has grown in each of the first three quarters of 2025, while inflationary pressures have receded. In China, however, the GDP is expected to be downgraded to around 4.5% for 2025, largely impacted by trade tensions with the U.S. and some European countries. the STOXX Europe 600 Index rose 0.7%; the United Kingdom’s FTSE dipped 0.4%; Japan’s Nikkei 225 Index dropped 4.1%; and China’s Shanghai Composite Index fell 1.7%.
• Consumer confidence: Consumer confidence fell sharply in November, declining by 6.8 points to 88.7 from 95.5 in October. The Present Situation Index, based on consumers’ assessment of current business and labor market conditions, decreased 4.3 points to 126.9. The Expectations Index, based on consumers’ short-term outlook for income, business, and labor market conditions, decreased 8.6 points to 63.2. The Expectations Index has tracked below 80 for ten consecutive months, the threshold that could signal a recession ahead.

Eye on the Month Ahead

Following the re-opening of the federal government, the primary focus in December will center on the state of the economy and the policy of the Federal Reserve relative to interest rates.

The Markets (as of market close October 24, 2025)

The major stock market indexes continued to climb last week, with the S&P 500 and the NASDAQ reaching new record highs. Investors were buoyed by a strong start to the third-quarter earnings season, particularly for major banks, with most companies reporting better-than-expected earnings and profits. On the global front, the announcement of a meeting between the United States and China muted concerns surrounding trade tariffs. While consumer prices rose in September, the advance was softer than expected, bolstering hopes for an interest rate cut by the Federal Reserve following its meeting this week. Among the market sectors, information technology and communication services were the leading performers. Ten-year Treasury yields were generally lower last week, dipping below 4.0%. Gold prices, which had been on a notable rally, declined last week, largely due to profit-taking and a reduction in safe-haven demand. Crude oil prices were volatile throughout the week, falling to their lowest levels in months, only to surge later in the week after the U.S. sanctioned two major Russian oil firms.

Stock Market Indexes

Market/Index	2024 Close	Prior Week	As of 10/24	Weekly Change	YTD Change
DJIA	42,544.22	46,190.61	47,207.12	2.20%	10.96%
NASDAQ	19,310.79	22,679.97	23,204.87	2.31%	20.17%
S&P 500	5,881.63	6,664.01	6,791.69	1.92%	15.47%
Russell 2000	2,230.16	2,452.17	2,513.14	2.49%	12.69%
Global Dow	4,863.01	5,956.58	6,045.76	1.50%	24.32%
fed. funds target rate	4.25%-4.50%	4.00%-4.25%	4.00%-4.25%	0 bps	-25 bps
10-year Treasuries	4.57%	4.00%	3.99%	-1 bps	-58 bps
US Dollar-DXY	108.44	98.46	98.88	0.43%	-8.82%
Crude Oil-CL=F	$71.76	$57.59	$61.47	6.74%	-14.34%
Gold-GC=F	$2,638.50	$4,249.10	$4,117.70	-3.09%	56.06%

Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark performance of specific investments.

Last Week’s Economic News

• The release of most economic data has been delayed due to the government shutdown.
• The Consumer Price Index (CPI) increased 0.3% in September following a 0.4% rise in August. Note: The September CPI data collection was completed before the government shutdown. In September, prices for gasoline rose 4.1% and were the largest factors in the overall monthly increase. Prices for energy rose 1.5% over the month. Food prices increased 0.2% last month. Consumer prices less food and energy rose 0.2% in September after rising 0.3% in each of the two preceding months. The CPI rose 3.0% for the 12 months ended in September after rising 2.9% over the 12 months ended in August. Prices less food and energy also rose 3.0% over the last 12 months. Energy prices increased 2.8% for the year. Prices for food increased 3.1% since September 2024.
• Existing-home sales rose 1.5% in September 2025. According to National Association of Realtors® Chief Economist Lawrence Yun, “As anticipated, falling mortgage rates are lifting home sales. Improving housing affordability is also contributing to the increase in sales.” Since September 2024, sales of existing homes have risen 4.1%. At a 4.6-month supply in September, unsold inventory was up 1.3% from the prior month and 14.0% from a year ago. The median existing-home price was $415,200 in September, down 1.7% from the August price of $422,400 but up 2.1% from one year ago ($406,700). Sales of existing single-family homes rose 1.7% in September from August and 4.5% from September 2024. The median existing single-family home price in September was $420,700, down from the August price of $427,700 but higher than the September 2024 price of $411,400.
• The national average retail price for regular gasoline was $3.019 per gallon on October 20, $0.042 per gallon below the prior week’s price and $0.125 per gallon less than a year ago. Also, as of October 20, the East Coast price decreased $0.050 to $2.902 per gallon; the Midwest price fell $0.007 to $2.805 per gallon; the Gulf Coast price declined $0.067 to $2.556 per gallon; the Rocky Mountain price dropped $0.052 to $2.997 per gallon; and the West Coast price dipped $0.047 to $4.166 per gallon.

Eye on the Week Ahead

There will be little relevant economic data available during the government shutdown, with the exception of this week’s Federal Open Market meeting.

The Markets (third quarter through September 30, 2025)

The third quarter of 2025 may best be characterized by continued strength in the equity market, moderating but resilient economic activity, and a shift in the Federal Reserve policy toward interest rate cuts. Gross domestic product rebounded notably from a lackluster opening quarter and corporate earnings grew, while inflationary pressures showed signs of accelerating. Overall, the economy in general, and the stock market in particular, tried to gauge the impact of President Trump’s tariffs, which created significant volatility early in the quarter, with major indices briefly hitting bear market territory. However, a subsequent “pause” in some tariff policies and the general resilience of the market allowed equities to rebound sharply, with investors looking past the short-term disruption.

U.S. stocks enjoyed robust growth in the third quarter, with each of the major indexes reaching multiple record highs, despite economic policy uncertainty, primarily focused on the impact of tariffs, and lingering geopolitical risks. Each of the stock market indexes listed here closed higher in the third quarter compared to the previous three-month period. Even the small caps of the Russell 2000 posted significant third-quarter gains, suggesting a broadening of market strength. The ongoing rally was heavily concentrated in the information technology and communication services sectors, driven by AI and megacap tech stocks. Each of the remaining stock market sectors ended the quarter higher, with the exception of consumer staples, which closed the quarter in the red.

In what many believe was the most significant development of the quarter, the Federal Reserve cut the federal funds rate by 25 basis points in September, marking the first rate cut since the end of 2024. Despite the rate cut, inflationary pressures remained a key concern. The Fed’s preferred measure of inflation, the personal consumption expenditures (PCE) price index, increased on an annual basis through August, as did the Consumer Price Index (CPI). Both measures of inflation exceeded the Fed’s 2.0% target (see below).

While inflation moved higher, the labor market slowed to a near standstill in the third quarter, which likely contributed to the Fed’s decision to cut rates. Job growth slowed significantly, the unemployment rate moved higher, while the number of job openings fell to its lowest level since 2021. The number of people receiving unemployment benefits increased by nearly 100,000 over the last 12 months.

Corporate earnings reached new highs in the third quarter. The estimated 12-month earnings growth rate, according to FactSet, is projected to be about 7.9%, which would mark the ninth consecutive quarter of earnings growth for S&P 500 companies. Eight of the 11 market sectors are projected to report year-over-year earnings growth, led by information technology, utilities, materials, and financials. Energy and consumer staples are predicted to show earnings declines. The number of S&P 500 companies expected to show positive earnings per share (EPS) growth for the third quarter is higher than average.

The U.S. economy, as measured by gross domestic product, showed resilience, accelerating at an annualized rate of 3.8%, following a 0.6% contraction in the previous quarter. The U.S. real estate market continued to be impacted by relatively high interest rates, low inventory, and rising home prices. However, August (the most recent data available) showed home prices began to fall and inventory increased. Mortgage interest rates started to decline, with Fannie Mae forecasting 30-year fixed mortgage rates to end 2025 and 2026 at 6.4% and 5.9%, respectively.

Crude oil prices fluctuated somewhat throughout the third quarter, with prices moving from about $70.00 per barrel in July to $62.50 per barrel in September. The downward trend in crude oil prices was linked to concerns about softening global demand, projections of increasing supply, and geopolitical unrest, particularly regarding the Ukraine/Russia war. The retail price for regular gasoline was $3.173 per gallon on September 22, $0.026 above the price a month earlier but $0.012 below the price from a year ago.

Stock Market Indexes

Market/Index	2024 Close	As of September 30	Monthly Change	Quarterly Change	YTD Change
DJIA	42,544.22	46,397.89	1.87%	5.22%	9.06%
NASDAQ	19,310.79	22,660.01	5.61%	11.24%	17.34%
S&P 500	5,881.63	6,688.46	3.53%	7.79%	13.72%
Russell 2000	2,230.16	2,436.48	2.96%	12.02%	9.25%
Global Dow	4,863.01	5,917.39	3.15%	7.22%	21.68%
fed. funds target rate	4.25%-4.50%	4.00%-4.25%	-25 bps	-25 bps	-25 bps
10-year Treasuries	4.57%	4.14%	-8 bps	-9 bps	-43 bps
US Dollar-DXY	108.44	97.82	0.03%	1.05%	-9.79%
Crude Oil-CL=F	$71.76	$62.51	-2.34%	-3.96%	-12.89%
Gold-GC=F	$2,638.50	$3,882.60	10.40%	16.97%	47.15%

Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark performance of specific investments.

Latest Economic Reports

• Employment: The latest employment report for August showed the labor market continued to weaken. Job growth ticked up 22,000 last month following an upwardly revised July increase of only 79,000. However, employment for June was also revised down by 27,000, from 14,000 to -13,000. With these revisions, employment in June and July combined was 21,000 lower than previously reported. In August, the unemployment rate ticked up 0.1 percentage point to 4.3%. The number of unemployed persons in August, at 7.4 million, was 148,000 above the July estimate. The number of long-term unemployed (those jobless for 27 weeks or more) increased by 104,000 to 1.9 million. These individuals accounted for 25.7% of all unemployed persons. The labor force participation rate in August rose 0.1 percentage point from July to 62.3%. The employment-population ratio in August, at 59.6%, was unchanged from the July estimate. Average hourly earnings increased by $0.10, or 0.3%, to $36.53 in August. Over the last 12 months, average hourly earnings rose by 3.7%, 0.2 percentage point below the 12-month average for the period ended in July. The average workweek in August was 34.2 hours for the third month in a row.
• There were 218,000 initial claims for unemployment insurance for the week ended September 20, 2025. During the same period, the total number of workers receiving unemployment insurance was 1,926,000. A year ago, there were 221,000 initial claims, while the total number of workers receiving unemployment insurance was 1,831,000.
• FOMC/interest rates: As expected, the Federal Open Market Committee cut the fed funds target rate range by 25 basis points to 4.00%-4.25%. In reaching its decision, the Committee indicated that it was trying to balance conflicting risks, with the downside risks to employment having risen, while inflationary pressures remained somewhat elevated. The FOMC projected more rate cuts this year and in 2026.
• GDP/budget: The economy, as measured by gross domestic product, advanced at an annualized rate of 3.8% in the second quarter, rebounding from a 0.6% decrease in the first quarter of 2025. Consumer spending, as measured by personal consumption expenditures, helped propel the second-quarter increase, climbing 2.5% after ticking up 0.6% in the first quarter. Spending rose for both services (2.6%) and goods (2.2%). After surging 38.0% in the first quarter, imports (which are a negative in the calculation of GDP) fell 29.3% in the second quarter. However, exports also declined in the second quarter, falling 1.8%, offsetting a 0.2% advance in the first quarter. Private investment declined 13.8% in the second quarter, cutting into the 23.3% gain in the prior quarter.
• August saw the federal budget register a deficit of $345 billion. August has registered a deficit 70 times out of 71 fiscal years since there are usually no major corporate or individual tax due dates in that month. August receipts were $344 billion versus $307 billion a year ago. Customs duties (e.g., tariffs) added $30 billion to receipts in August and are up 137% compared to a year ago. Government outlays in August were $689 billion versus $687 billion a year ago. The deficit through the first 11 months of fiscal year 2025, at $1,973 billion, was above the $1,897 billion deficit over the first 11 months of the previous fiscal year. Thus far for fiscal year 2025, individual income tax receipts added up to $2,358 billion, while outlays for Social Security totaled $1,447 billion.
• Inflation/consumer spending: According to the latest Personal Income and Outlays report, personal income and disposable (after-tax) personal income each rose 0.4% in August after increasing 0.4% and 0.3%, respectively, in July. Consumer spending increased 0.6% in August after rising 0.5% the previous month. In August, the PCE price index rose 0.3% after increasing 0.2% in July. Core prices advanced 0.2% last month, unchanged from the July estimate. The PCE price index rose 2.7% since August 2024, while core prices increased 2.9% over the same period. Over the past 12 months ended in August, prices for goods increased 0.9% and prices for services rose 3.6%. Food prices increased 2.2%, while energy prices decreased 0.1%.
• The Consumer Price Index rose 0.4% in August after increasing 0.2% in July. Over the 12 months ended in August, the CPI rose 2.9%, 0.2 percentage point higher than the 12-month period ended in July. Core prices rose 0.3% last month and 3.1% since August 2024. The primary factor in the August increase was a 0.4% rise in prices for shelter. Food prices rose 0.5% last month from July. Energy prices increased 0.7% in August as gasoline prices rose 1.9% over the month. Over the last 12 months ended in August, food prices increased 3.2%, energy prices rose 0.2%, and shelter prices advanced 3.6%.
• Prices at the wholesale level have been somewhat unpredictable this year. In August, the Producer Price Index declined 0.1% after advancing 0.7% (revised) in July. Producer prices increased 2.6% for the 12 months ended in August after rising 3.1% for the 12-month period ended in July. Excluding food and energy, producer prices dipped 0.1% in August but increased 2.8% for the year. In August, prices for goods edged up 0.1% from the previous month and 2.1% since August 2024. Last month saw prices for services decline 0.2% after a 0.7% increase in July. Prices for services rose 2.9% for the 12 months ended in August, lower than the 4.0% increase over the 12 months ended in July.
• Housing: Sales of existing homes decreased 0.2% in August but were up 1.8% from a year earlier. The median existing-home price was $422,600 in August, lower than the July price of $425,700 but above the August 2024 estimate of $414,200. Unsold inventory of existing homes in August represented a 4.6-month supply at the current sales pace, unchanged from the July total but above the 4.2-month supply from a year ago. Sales of existing single-family homes fell 0.3% in August but were 2.5% above the August 2024 figure. The median existing single-family home price was $427,800 in August ($432,000 in July), higher than the August 2024 estimate of $419,800.
• Sales of new single-family homes jumped higher in August, exceeding expectations, although inventory of available new homes for sale plunged lower from the previous month. Sales of new single-family homes rose 20.5% in August and were 15.4% above the August 2024 figure. The median sales price of new single-family houses sold in August was $413,500 ($395,100 in July), which was higher than the August 2024 estimate of $405,800. The August average sales price was $534,100 ($478,200 in July), up from the August 2024 average sales price of $475,600. Inventory of new single-family homes for sale in August represented a supply of 7.4 months at the current sales pace, 17.8% below the July estimate of 9.0 months and is 9.8% below the August 2024 estimate of 8.2 months.
• Manufacturing: Industrial production edged up 0.1% in August after decreasing 0.4% in July. Manufacturing output rose 0.2% last month after edging down 0.1% in July. Within manufacturing, the production of motor vehicles and parts increased 2.6% in August, while factory output elsewhere edged up 0.1%. Mining moved up 0.9%, while utilities decreased 2.0%. Total industrial production was up 0.9% since August 2024.
• New orders for durable goods rose 2.9% in August after decreasing 2.7% in July. Transportation equipment drove the August increase after climbing 7.9%. New orders excluding transportation increased 0.4%. Excluding defense, new orders increased 1.9%. For the 12 months ended in August, durable goods orders advanced 7.1%.
• Imports and exports: Both import and export prices came in higher than expected in August. Import prices advanced 0.3% last month following a 0.2% decrease in July. Prices for imports were flat for the 12 months ended in August. Higher prices for nonfuel imports more than offset lower prices for fuel imports in August. Import fuel prices fell 10.1% over the past 12 months. Prices for nonfuel imports advanced 0.4% in August, the largest monthly advance since April 2024. Export prices rose 0.3% in August after rising 0.1% the previous month. Export prices increased 3.4% over the past 12 months, the largest 12-month increase since December 2022.
• The international trade in goods deficit for August was $85.5 billion, 16.8% under the July estimate. Exports of goods for August dipped 1.3%, while imports of goods declined 7.0%. Over the 12 months ended in August, exports decreased 0.4% and imports fell 4.1%.
• The latest information on international trade in goods and services, released September 4, saw the goods and services deficit increase 32.5% in July to $78.3 billion. Exports of goods increased 0.3% to $280.5 billion in July. Imports of goods rose 5.9% to $358.8 billion. For the 12 months ended in July 2025, the goods and services deficit increased $154.3 billion, or 30.9%, from the same period in 2024. Exports increased $103.1 billion, or 5.5%. Imports increased $257.5 billion, or 10.9%.
• International markets: September saw the global economy and stock markets largely driven by the ongoing effects of new trade policies, evolving central bank strategies, and persistent inflation concerns. Shifts in trade policy, particularly stemming from higher U.S. tariffs on a broad range of imports, prompted companies to accelerate shipments (“front-loading”) in the first half of the year, which temporarily boosted trade figures but the effects of the actual tariffs began to increasingly weigh on global industrial production and trade in September. The eurozone economy maintained a modest growth pace, with services activity driving the increase, although manufacturing was slower, while inflation accelerated. Economic indicators in China pointed to weakness as the boost from front-loading trade activities unwound, higher tariffs took effect, and weakness in the real estate market persisted. In September, the STOXX Europe 600 Index rose 2.7%; the United Kingdom’s FTSE advanced 2.6%; Japan’s Nikkei 225 Index gained 6.2%; and China’s Shanghai Composite Index ticked up 0.6%.
• Consumer confidence: Consumer confidence fell 3.6 points in September to 94.2 from 97.8 in August. The Present Situation Index, based on consumers’ assessment of current business and labor market conditions, decreased 7.0 points to 125.4. The Expectations Index, based on consumers’ short-term outlook for income, business, and labor market conditions, decreased 1.3 points to 73.4. The Expectations Index has been below the threshold of 80 (typically signaling a recession ahead) since February 2025.

Eye on the Quarter Ahead

October begins the last quarter of the year and brings with it plenty of important, potentially-market-moving, information. The jobs report for September is out at the beginning of the month. The employment sector has slowed considerably over the past several months. The first estimate of gross domestic product for the third quarter is out at the end of the month. The economy grew at about 3.3% in the second quarter. The Federal Open Market Committee meets at the end of the month for the second to the last time in 2025. The Committee decided to reduce interest rates in September and indicated that there is a likelihood for at least one more rate reduction before the end of the year.