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ECONOMIC UPDATE
September 2025 | Monthly Economic Update
Source: FactSet
A slowing job market shifted the Federal Reserve’s stance to potentially start cutting interest rates in September. The possibility of lower borrowing costs sent stocks and bonds higher. A globally diversified moderate risk 60/40 stock, bond portfolio gained 2.1% in August, and sits on a stellar 11.7% return for the year.
In the U.S., the S&P 500 index gained 2.0% in August on strong earnings. For Q2’25, the year-over-year earnings growth rate for the S&P 500 is 11.9%, which would be the third consecutive quarter of double-digit earnings growth for the index.
Within the U.S. equity markets, new winners emerged as investors’ lofty expectations on AI investments were not quite met. The unloved part of the market, such as small-cap stocks and value-oriented companies, outperformed their large cap and tech-heavy growth counterparts in August, driven also by rising expectations for interest rate cuts.
International developed markets delivered strong returns, helped by Japan and Europe as trade deals got done. Emerging market stocks also gained as China extended its trade truce until November.
Bond prices, which move in the opposite direction of interest rates, rose on hopes of upcoming interest rate cuts. Lower quality bonds continue to perform better, highlighting the strength of the economy to date.
Lastly, across other asset classes, gold hit a new high as the dollar continued to fall and hope for interest rate cuts rose.
The Monthly Riddle
What animal has two feet but can’t walk?
LAST MONTH’S RIDDLE:
What is there one of in every corner and two of in every room?
ANSWER: The letter “O”
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This is for informational purposes only, is not a solicitation, and should not be considered investment, legal or tax advice. The information has been drawn from sources believed to be reliable, but its accuracy is not guaranteed, and is subject to change. Investors seeking more information should contact their financial advisor. Financial advisors may seek more information by contacting AssetMark at 800-664-5345.
Investing involves risk, including the possible loss of principal. Past performance does not guarantee future results. Asset allocation cannot eliminate the risk of fluctuating prices and uncertain returns. There is no guarantee that a diversified portfolio will outperform a non-diversified portfolio. No investment strategy, such as asset allocation, can guarantee a profit or protect against loss. Actual client results will vary based on investment selection, timing, market conditions, and tax situation.
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