This week, the S&P 500 reached new all-time highs, with all major indexes set to finish in the green. The magnificent seven stocks had a great month in September, eclipsing the overall broad-based market for the first time in 2025. Small-cap stocks capped off September very strongly, with some analysts noting this as a sign of an underpinning for the current bull market. The Government shut down this week, leading to a mute last few days of economic news.
In corporate news, Mag-7 stocks have lagged behind the overall S&P 500 index for most of this year, until this past month. The continued climb of the Mag-7 and other tech stocks has persisted for several reasons, supported by strong earnings, expectations of AI-driven growth, and the lowering of interest rates. A significant amount of spending on AI has also benefited many companies, and AI spending is expected to increase next year to a global total of $2 trillion. Spotify made headlines this week by announcing the leave of its CEO, Daniel Ek, who will be transitioning to a new role as executive chairman. Spotify was founded by Ek in 2006 and now has almost 700 million monthly active users. The Holiday Inn, part of InterContinental Hotels Group, also made headlines this week for a less significant but perhaps more exciting announcement: it is launching breakfast-scented alarm clocks. This clock, which will wake guests up with different breakfast theme scents instead of beeps, will debut as a trial in hotels across Australia, New Zealand, Singapore, Thailand, and Japan. Among the most popular scents so far are coffee, tea, baked goods, fruit, bacon, and eggs.
In economic news, existing home pending sales rose in August by 4% and increased 3.8% from last year. This increase is most likely due to a slight decline in mortgage rates, which reached around 6.5% in August, down from 7% over the last two years. On Tuesday, the S&P Case-Shiller home price index was reported at 1.7%, slightly below the 1.9% forecast. This index measures the average change in the value of existing single-family homes in 20 different major metropolitan areas. The index reported a 1.7% year-over-year increase in home prices but a 0.1% month-over-month decrease, marking the fifth consecutive month of declining home prices. U.S. job openings remain unchanged from last month at 7.23 million in August, slightly above estimates of 7.1 million. This number remains higher than historical averages but has fallen since reaching 12.1 million in the Spring of 2022. Consumer confidence was reported at 94.2, slightly below estimates of 96.0.
The highly anticipated Friday release of the monthly jobs report will not occur as the Government shutdown continues into its third day. The monthly jobs report is the most critical data piece necessary for the Fed to implement monetary policy. However, markets do not seem concerned about the lack of economic data this week, as the S&P 500 continues to climb higher to a new all-time high. Economists and analysts are pricing in a roughly 97% chance that the Fed will cut rates by another quarter percentage point to 3.75% to 4% at its next meeting on October 28-29. There is also a high chance of a quarter-rate cut at the last 2025 Fed meeting on December 9-10.
In closing, I came across a feel-good article this week that is almost too unlikely to believe. Two weeks ago, Ian Brandon, 74, and Malcolm Atkins, 73, from London and Essex, were visiting the grave of their third great-grandfather, Anthony Smith. They arrived at the gravesite in the small town of Raunds in Northamptonshire, two hours North of London, to find that the only visitors in the whole cemetery happened to be standing over their grandad's headstone. It was then that Americans Rand Smith, 69, and his wife Janeel asked Ian and Malcolm if they knew who this person was, and then came the reply, "That is our third great-grandfather." In astonishment, Rand replied, "That's my third-great-grandfather." The three men are fourth cousins and happened to visit the graveyard within the hour on the same day, in what the Smiths claim was a 1 in 12 billion chance. To make the event even more unbelievable, a total of nine years of planning went into this trip, all of which took place on the same day. "We feel divine intervention put us together. What a highlight of our lives."
Ryan Motsinger
