Good Inflation Data Leads To Lower Interest Rates & Record Highs In Stocks

Market Commentary – September 15, 2025

Markets cheered last week as a much better-than-expected Producer Price Index (PPI) and an as-expected Consumer Price Index (CPI) sent interest rates lower and propelled stocks to record highs.

Also supporting the move higher in stocks was the earnings report from Oracle (ORCL), which had blowout earnings growth, underscoring continued strong demand for artificial intelligence (AI) products. The market is pricing in 100% probability that the Federal Reserve (Fed) will cut interest rates this week by 25 basis points and that the Fed will cut twice more this year, in October and December. Lower rates support the economy, the consumer, and risk assets (which includes equities). We continue to believe the S&P 500 is tracking toward 7000, representing a 6% gain from current levels. We also are expecting the rally to continue into the first quarter of 2026, with the S&P 500 achieving 7200, which would be a nearly 10% gain. In our view, this Bull has got legs and is still charging ahead.

Stocks Can Go Higher But May Be Choppy

September is known for its volatility and October is known for opportunity, typically offering favorable entry points. The S&P 500 Cumulative Advance/Decline line last week hit a record high, reinforcing the bull market and the breakout to new highs. But as stocks have been rallying, the price momentum indicators are weakening. Both the Moving Average Convergence Divergence (MACD) and the Relative Strength Index (RSI) are falling, a sign of weakening momentum. This tells us there is a risk of either a market correction or a choppy trading range with sector rotation. If the market does indeed correct, we believe it’s in the range of 5%-10% – a reset that could set the stage for additional new highs.