Stocks Continue To March To New Highs

Market Commentary – September 22, 2025

Last week, in reaction to the labor market showing early signs of weakening, the Federal Reserve (Fed) cut interest rates, as expected, by 25 basis points, beginning a new cycle of lowering interest rates. This marks the first rate cut of 2025 after three cuts late last year that totaled 100 basis points. The Fed has a dual mandate: maximum employment and stable inflation. The Fed has been trying to get inflation back down to 2% but inflation has remained elevated; the Fed does not expect inflation to return to 2% for a few more years. Despite this elevated inflation, the Fed said it needed to support the labor market which is weakening so the FOMC (Federal Open Market Committee) decided to cut rates. The equity markets celebrated the lower rates by marching to new record highs. We remain bullish on the market, but stocks remain very overbought. The risk remains that stocks correct 5.0%-10% or have a temporary sector rotation from Growth to Value. We maintain our year-end target of 7000, rising to 7200 by early next year.