STOCK MARKET RECAP SEPTEMBER 2025

The stock market has continued its steady climb since the lows reached on April 8^th at the depths of the tariff concerns.  The S&P 500 has risen 33% since the low point in April and has climbed about 5% over the last two months.  The S&P 500 is now up almost 13% for the year and the Nasdaq is now up about 16% in 2025 – despite the big decline during the tariff announcements.

In the chart below you can see the extreme price volatility in April and the steady move higher over the last four months.

Economic news has been mostly negative over the last month. Inflation has increased slightly over the last two months.  Jobs numbers have been weak lately and the unemployment rate is now climbing.  Just this week, the Fed decreased interest rates by 0.25% and they indicated that there could be two more rate decreases before the end of the year.

If inflation remains under control, I expect the economy to be fairly resilient.  Interest rate cuts will help, and the economy is being carried by two groups that are less affected by a soft labor market – the wealthiest 10% and retirees. 

The steady and consistent increases in stock prices are a cause for some concern.  My valuation gauge indicates that the stock market (S&P 500) is now 24% above its fair market value in late September.  This is higher than we were in January 2022. The last time the market was overvalued by this much was in 2000 during the dot-com bubble. 

I do not trade based on market valuation levels and you should not either.  It is just a reminder that you need a strategy in place to protect your savings in case we experience a bear market. Older investors in particular need loss protection.

Stay Disciplined My Friends,

Phil

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