Financial insights for the week ending September 12, 2025
For the week ending September 12th, the S&P 500 rose by 1.59%, the NASDAQ was up 2.03%, the Dow Jones Industrial Average rose by 0.95%, and the Russell 2000 inflated by 0.25%.
This week’s markets continued their melt-up as investors grew increasingly confident that the Federal Reserve will begin cutting interest rates next week. The rally was fueled by the August Consumer Price Index (CPI), which showed inflation holding steady at 3.1%. While still above the Fed’s 2% target, the report was not concerning enough to outweigh policymakers’ growing worries about a slowing job market. We also saw the release of Consumer Credit levels, which revealed that households now hold the highest amount of outstanding debt ever recorded. A rate cut would make that debt cheaper to service, providing further justification for policy easing. Markets are now pricing in nearly a 100% probability that the Fed will lower rates by 0.25% at its September 17th meeting. That expectation drove stocks broadly higher across the week, with leadership once again coming from technology and growth-oriented sectors.
Next week is the big one. The Federal Reserve is set to meet and is highly expected to decrease interest rates by 0.25%. Because that move is already fully priced into the markets, the real focus will shift to what the Fed signals for its October and December meetings. Investors will be listening closely for forward guidance. So far, stocks have rallied on the expectation that lower rates will reduce business expenses and lift profit margins. But if the coming rate cut is framed less as a growth-supporting move and more as a response to a weakening labor market, the narrative could quickly flip from “rate cuts are bullish” to “rate cuts are a sign of economic stress.” Beyond the Fed, attention will also turn to healthcare. In the coming weeks, Medicare will release its Annual Notice of Change (ANOC). Typically this is a routine update, but the 2026 version is expected to bring larger-than-usual adjustments. While the ANOC may not directly move financial markets, it will be closely tracked by advisors here given its impact on monthly premiums and benefit coverage. This year’s notice is widely expected to be filled with more changes than normal, making it a particularly important planning consideration for retirees and those approaching retirement.
Last week, our podcast went over 401(k) loans and some of the pros and cons of them. For this week, we thought it would be helpful to go over a question from a client from that video: Client Question: What happens if I default on the loan from my 401(k)? Answer: By taking a loan from your 401(k), you avoid creating an immediate taxable event compared to a direct withdrawal. However, if you do not successfully pay the loan off, the balance turns into a distribution, making it taxable. If you are younger than 55 (or in some cases 59½), you may also face a 10% early withdrawal penalty on top of normal income taxes. If you fall into this scenario, it’s important to know your options. One alternative to a 401k loan is a 401k 'hardship withdrawal.' While hardship withdrawals usually don’t avoid income taxes, they can sometimes allow you to sidestep the 10% penalty if your 'hardship' circumstances qualify under IRS rules.
Enjoy your day! Come back next Saturday for our latest commentary. We are here to answer any of your financial questions.