September brought a Federal Reserve rate increase, higher long-term Treasury yields, and rising oil prices tied to the U.S.-Iran conflict. Most stocks and bonds fell together, limiting opportunities for diversified investors to gain ground.
As October begins, the consumer price report and the Federal Reserve’s late-month meeting will be important developments to watch.
Technology Leads a Split Stock Market
Technology carried the month. The Nasdaq 100 rallied on strength in AI and chip stocks, while the S&P 500, the Dow, and shares of smaller companies fell as rising rates affected the rest of the market.
- The S&P 500 slipped 0.45%.
- The Nasdaq 100 rallied 3.23%.
- The Dow Jones Industrial Average slumped 4.29%.
September’s Federal Reserve Decision
At its September meeting, the Federal Reserve raised its benchmark rate by a quarter point, marking its first rate hike since 2023. After the decision, most policymakers forecast another hike in 2026.
Even with a softer inflation reading late in the month, the Fed has little reason to ease while prices are still rising too quickly. For individuals working through retirement planning decisions, rate policy remains one factor among many to consider with a financial advisor.
Higher Treasury Yields Affect Borrowing Costs
The 10-year Treasury yield rose to its highest level since 2007. When yields rise, the value of existing bonds falls, especially for funds holding longer maturities.
Over time, higher yields can increase rates on mortgages, car loans, and business borrowing. These market movements are part of the broader financial services environment our team monitors through regular client communications.
Economic Growth Is Revised Higher
Second-quarter growth was revised up to a 2.2% annual rate, lifted by stronger consumer spending and business investment, even as borrowing costs and energy prices climbed.
That strength supports paychecks and profits, but it also makes inflation harder to tame.
Diesel Prices Add to Price Pressures
The national average price of diesel passed $6 for the first time in September and, by late September, was up about 70% since the U.S.-Iran conflict began. Attacks on tankers and Russian refineries, along with Moscow’s export ban, left refiners unable to keep up.
Because diesel moves nearly every product to market, its cost flows into freight, food, and delivery prices, making it a broader source of price pressure than gasoline.
What We Are Watching in October
October will reveal whether September’s surge in energy prices and bond yields was a passing shock or the start of something more durable. The mid-month consumer price report will be the key test.
A fuel-driven increase might be manageable, but signs that higher costs are spreading into rents, insurance, and other services would strengthen the case for another hike at the Fed’s late-October meeting.
FAQ
How did major U.S. stock indexes perform in September?
The S&P 500 slipped 0.45%, the Nasdaq 100 rallied 3.23%, and the Dow Jones Industrial Average slumped 4.29%.
Why did the Nasdaq 100 rise while other indexes fell?
The Nasdaq 100 rallied on strength in AI and chip stocks, while rising rates affected other parts of the market.
What did the Federal Reserve do in September?
The Federal Reserve raised its benchmark rate by a quarter point, its first rate hike since 2023. Most policymakers forecast another hike in 2026.
Why do rising Treasury yields matter?
When yields rise, the value of existing bonds falls, especially for funds holding longer maturities. Higher yields can also increase rates on mortgages, car loans, and business borrowing over time.
What will be important to watch in October?
The mid-month consumer price report will be an important test. Signs that higher costs are spreading into rents, insurance, and other services could strengthen the case for another rate hike at the Federal Reserve’s late-October meeting.
We’re monitoring these developments at Agate Financial Partners for our clients. If you have any questions about recent market changes and how they may relate to your circumstances and finances, please reach out. We’re here to help you understand your financial plan and all available options.