Resilient Momentum Amid Uncertainty
Markets entered the fourth quarter with remarkable strength. Fading fears of a recession, renewed momentum in corporate earnings, and the Fed’s first rate cut of the year all helped propel equities to fresh record highs in September—a month that is historically weak for stocks. Encouragingly, that momentum has continued into October, even against the backdrop of a federal government shutdown.
Performance Highlights
Economic Backdrop
Recession worries have faded substantially. After early-year weakness, GDP rebounded, with Q2 revised higher to 3.8% and the Atlanta Fed’s GDPNow projecting the same pace for Q3. Consumer resilience remains the linchpin: while lower-income households are stretched, high earners and retiring baby boomers flush with cash continue to drive demand.
Tariffs, meanwhile, have been less disruptive than feared—adding modestly to consumer goods prices but not derailing growth or inflation. Inflation remains sticky, mostly due to housing, but the Fed has shifted its focus to labor market softness. Hiring has slowed, with more businesses choosing automation, yet layoffs remain scarce. Weekly jobless claims—a key signal—have stayed muted.
Policy & Politics
Serving as a tailwind to investor confidence, the One Big Beautyful Bill Act is set to stimulate both corporate and consumer spending. Businesses benefit from incentives to invest in AI and data centers, while individuals are expected to receive roughly $150 billion in additional tax refunds in early 2026.
Meanwhile, the Fed insisted on its independence amid political turbulence while cutting rates by 25 bps to 4.00–4.25% and signaling further easing. Markets now anticipate additional 25 bps cuts in both October and December. However, the federal shutdown has disrupted official economic reporting, forcing the Fed to lean on private data: ADP payrolls showed a surprise decline in September, and ISM surveys signaled continued labor market weakness.
Market Valuations & Strategy
Valuations remain stretched: the S&P 500 trades at a forward P/E of ~23, well above the 25-year average of 17. Much of this is concentrated in AI and data center stocks—evoking memories of the late-1990s dot-com era. However, today’s rally is supported by tangible revenue growth and government-backed infrastructure investment, lending greater durability to the story.
Our approach reflects both conviction and caution in an uncertain era:
While we closely analyze markets, economic trends, and policy shifts, our priority is always our clients. We work with each individual and family to design allocation strategies tailored to their unique circumstances—helping them pursue their goals both before and throughout retirement, regardless of the short-term market environment. Beyond investment management, our comprehensive wealth management approach includes retirement income planning, tax and estate strategies, risk management, and ongoing financial guidance to ensure every aspect of a client’s financial life is aligned with their long-term objectives.