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September 02, 2025

Beacon Weekly Investment Insights 9.2.25

Chief Investment Officer, John Longo, PhD, CFA, provides insights to guide you through changing market conditions. Please read the full text below or download the PDF version.

The S&P 500 fell a modest 0.1% last week, but it was not a week without important events. We begin our recap with President Trump’s efforts to fire Federal Reserve governor, Lisa Cook, over allegations of mortgage fraud. Ms. Cook disagrees with and is fighting the allegations in a conflict that may wind up in the U.S. Supreme Court. Some analysts view President Trump’s actions as a threat to the independence of the Federal Reserve. Gold rose nearly 4% last week on the news and trades near all-time highs.

NVIDIA, the star of the artificial intelligence (AI) revolution, reported earning last week. NVIDIA’s earnings exceeded expectations, but growth in AI chips and data center demand came in weaker than expected. The stock fell 2% last week but remains up 30% nearly year-to-date. MongoDB, a lesser-known AI firm with a focus on databases, surged 44% last week amid strong earnings and demand for its products.

Dollar General, a proxy for the lower-income consumer, reported earnings that exceeded expectations, but the stock fell 3% last week after stating that its core customers faced tougher times ahead. Best Buy and Dick’s Sporting Goods, proxies for the U.S. consumer’s discretionary income, beat earnings expectations, but each stock fell more than 5% last week on the potentially negative impact of tariffs on future revenue.

Growth in U.S. Gross Domestic Product (GDP) was revised upward to a healthy 3.3% for Q2. This solid figure follows a tepid Q1 GDP report which showed a drop of 0.5%. This choppy data is likely reflective of economic activity that is impacted by a still evolving tariff policy. Our outlook is for continued modest economic growth for the remainder of the calendar year.

The inflation rate remained steady according to the latest Personal Consumption Expenditures (PCE) report. The PCE Index is reportedly the Federal Reserve’s preferred inflation gauge over the better known Consumer Price Index (CPI). The PCE index rose 2.6% year-over-year, matching forecasts and providing some reassurance that inflation is moderating. The reading bolstered the odds of the Federal Reserve cutting interest rates at its September meeting to a 90% probability.

The turn of the calendar month always signals a number of important economic reports. The Institute for Supply Chain Management (ISM) will release their forward-looking Manufacturing and Services reports on Tuesday and Thursday, respectively. Recent ISM reports have been sluggish, so investors will look for signs of economic acceleration or deceleration to refine their portfolio positions.

Two employment reports will be released this week. Automatic Data Processing (ADP), the largest payroll processor in the U.S., will release their jobs report on Thursday. The jobs report produced by the federal government that determines the official unemployment rate will be released on Friday. Signs of a weakening job market will further bolster the Federal Reserve’s interest rate reduction plan. Several Federal Reserve governors will be on the speaker circuit this week, perhaps providing clues about the forthcoming Fed meeting later this month. The public debate has now shifted to whether the Fed will cut 25 or 50 basis points. Federal Reserve governors Alberto Musalem and Neel Kashkari will be speaking on Wednesday, while governors John Williams and Austin Goolsbee will be speaking on Friday. We hope you had a wonderful Labor Day weekend and wish you a great unofficial start to the fall season.

 

Market Scorecard:	8/29/2025	YTD Price Change
Dow Jones Industrial Average	45,544.88	7.26%
S&P 500 Index	6,460.26	9.95%
NASDAQ Composite	21,455.55	11.32%
Russell 1000 Growth Index	4,481.98	10.83%
Russell 1000 Value Index	1,979.52	8.69%
Russell 2000 Small Cap Index	2,366.42	5.91%
MSCI EAFE Index	2,722.38	21.92%
US 10 Year Treasury Yield	4.227%	-25 basis points
WTI Crude Oil	$64.01	-11.42
Gold $/Oz.	$3,516.10	28.13%