Equities Rally to Record Levels as Investors Eye Upcoming Fed Policy Meeting

Equities Rally to Record Levels as Investors Eye Upcoming Fed Policy Meeting

Global markets posted modest gains for the week, with a Thursday rally lifting all three major U.S. indexes to successive record highs. The S&P 500 logged its fifth positive week in the past six, now up nearly 4% since the start of August. Global equities, as measured by the MSCI All Country World Index (ACWI), gained 1.74% for the week, while U.S. equities, as measured by the S&P 500, rose 1.60%. Emerging Markets once again led all major asset classes with a 3.96% advance.

U.S. Labor Statistics

Tuesday’s annual revision by the U.S. Bureau of Labor Statistics showed that the economy created 911,000 fewer jobs from March 2024 to March 2025 than previously estimated. Meanwhile, a separate report indicated that initial jobless claims rose to 263,000 in the latest week—the highest level in nearly four years.

Consumer Price Growth

Consumer price growth accelerated in August, with the Bureau of Labor Statistics reporting on Thursday that headline CPI rose 2.9% year-over-year, up from 2.7% in July, while core CPI, which excludes food and energy, held at 3.1%. In contrast, the producer price index (PPI) decelerated to 2.6% year-over-year, though core wholesale prices edged up slightly to 2.8% from 2.7%. Despite inflation remaining above the Fed’s 2% target, investors largely expect a rate cut at the upcoming meeting amid signs of a cooling labor market.

Consumer Sentiment for September

The economic calendar wrapped up on Friday with the preliminary University of Michigan Index of Consumer Sentiment for September, which fell to 55.4 from 58.2 in August. While sentiment remains above the year’s lows in April and May, consumers highlighted “multiple vulnerabilities in the economy, with rising risks to business conditions, labor markets, and inflation,” with trade policy also cited as a concern. One-year inflation expectations held steady at 4.8%, while long-run expectations rose for a second consecutive month to 3.9%.

Looking Ahead

For the week ahead, the key focus is the Federal Reserve’s September 16–17 monetary policy meeting, where the central bank is widely expected to lower short-term interest rates. Markets will also monitor upcoming data on export/import prices, retail sales, and housing market indicators.

As Always

I’d like to leave you with the final line we’ve used since we started these commentaries back at the very height of market volatility in March 2020. Always remember that we create financial/investment plans not for the easy times, but to prepare for the tough ones.