Hi All — Brian here. A few weeks ago, the Federal Reserve acted as traders overwhelmingly expected it would, cutting interest rates by 25 basis points to the 4.0-4.25% range. That’s the lowest the central bank’s benchmark borrowing rate has been since December 2022.

And what a difference three years can make! The last time the federal funds rate was this low, markets were just weeks away from the bottom of 2022’s brutal bear market. ChatGPT had debuted less than a month earlier. And few could predict the multi-year tech boom that the emergence of AI would kick off. It took the S&P 500 almost six years to recover from the 2008-2009 financial crisis, but just 14 months to hit new highs after the October 2022 bottom. 

The phrase “this time is different” gets a bad rap in finance. But sometimes, things really are different. Markets typically take years to recover from bear markets, like the one in 2022. But excitement around an unprecedented technology can speed up recoveries dramatically. 

However, today, investors might find hope that this time isn’t different. According to research from LPL Financial, when the Fed has previously cut rates near market highs, markets historically gained an average of 13% in the next 12 months and moved higher 93% of the time. Past performance is no guarantee of future results, but it’s worth noting that the S&P 500 is already up nearly 20% since the Fed’s cut of 50bps in September of last year, which also occurred near market highs.

This time around, all three major indices are in the green for the weeks since the Fed’s move on September 17. That bucks the so-called “September effect”, which describes the stock market’s historical underperformance in the first month of fall.

Of course, plenty of lingering concerns suggest that this time may well be different: tariff tension, labor market weakness, and now a government shutdown to boot. But a noteable track record and a positive September may give investors some cause for optimism heading into the new month. 

If you're wondering how to prepare your portfolio for lower rates, or want to check in on any other potential catalysts or pitfalls, reach out to schedule a call. We're here to help. In the meantime, let's dive into what happened in September.

SEPTEMBER MARKET PERFORMANCE

SEPTEMBER MARKET SUMMARY

• After an August in which the Dow Jones Industrial Average outperformed its peers for a change, tech dominance reasserted itself. The tech-heavy Nasdaq Composite tripled the Dow’s 1.9% rise in September.

• CPI inflation came in at 2.9% year-over-year for August, an increase from the prior month’s 2.7% year-over-year increase. Core PCE, the Fed’s preferred inflation gauge, rose the same amount annually, still above its 2.0% target.

• Signs of weakness in the labor market continued to mount, with ADP figures showing that private companies employed 32,000 fewer people in September than the month prior. This came on the heels of a Bureau of Labor Statistics (BLS) report that the economy created 911,000 fewer jobs than thought in the 12 months ended in March.

• The U.S. hit a new crude oil production record, with data from the Energy Information Administration showing that 13.58 million barrels were produced per day in June. For context, the prior record of 13.53 million barrels per day was set in October 2024.

• Consumer confidence declined again in September, falling from 97.8 in August to 94.2. That’s the lowest level since April, when tariff uncertainty was at its height.

• Revised Q2 GDP numbers showed the economy growing by 3.8% in Q2, compared to the prior estimate of 3.3%. The revision came as consumer spending growth was also upwardly revised from 1.6% to 2.5%.

ONE BIG THING: THE FED TEASES TWO MORE RATE CUTS IN 2025

The Federal Reserve typically doesn’t like to surprise markets. But it did exactly that, in September 2024, a little over a year ago, when it announced a rate cut of 50bps, instead of the 25bps cut that most investors were expecting.

Now, the Fed is expected to cut interest rates twice more in 2025. The ADP’s disappointing report on private sector jobs numbers reinforced the market’s conviction that more rate cuts are in store. 

The next Federal Open Market Committee (FOMC) meeting is scheduled for October 28-29, and we may not get much more government data illuminating labor market conditions, if the government shutdown that took effect on October 1 persists.

The FOMC meeting will still take place, as the Fed is an independent actor. But if the shutdown lasts as long as the 34-day partial shutdown of 2018 and 2019, then the recent ADP data showing surprisingly weak private sector hiring may be the most pertinent jobs data point that the Fed sees before its next decision. 

Amid the shutdown, the BLS has not released its seminal jobs report for September, nor its print on weekly initial unemployment claims, due on Thursday, October 3. The central bank might have limited access to new inflation readings as well. The next Consumer Price Index (CPI) report is scheduled for release on October 15.

Finally, there’s the effect of the shutdown itself on the US economy, and how it could factor into the Fed’s calculations. Up to 600,000 workers could be impacted by lost or reduced wages, which could rattle consumer confidence and reduce spending. The Trump administration has also announced its intention to further eliminate federal roles throughout the shutdown. Any further labor market pain potentially raises the odds of another rate cut in late October. 

FEATURED POST

3 in 4 Women Aren’t Prepared for Inheritance

A recent UBS report found that the vast majority of high-net-worth women aren’t prepared for inheritance. The Swiss investment bank surveyed 2,000 female investors with at least $1 million in assets for its 2025 Global Wealth Report. A quarter of them expected to inherit over $5 million.

However, around 8 in 10 women who already inherited money from their parents reported facing challenges. Some said they hadn’t known the extent of their family’s wealth or had any conversations about estate or succession planning. In many cases, there was no plan in place.

Here’s what you need to know →

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CLOSING REMARKS

Our team at Griffin Asset Management is here to help you make the most of the opportunities and challenges ahead.

If you have any questions or would like to discuss your financial strategy, please don’t hesitate to reach out.

We’re always available to set up a call and provide the personalized advice you need. Thank you for your continued trust and partnership.