Weekly Market Performance — September 26, 2025

Markets Blog

David Matzko, LPL Research

LPL Research provides its Weekly Market Performance for the week of September 22, 2025.

Index Performance

U.S. and International Equities

U.S. Equities: The S&P 500 and Nasdaq Composite both closed at record highs on Monday before losing ground the next three sessions. Gains on Friday, after reassuring inflation data helped pare weekly losses, were not enough to bring the major averages back to breakeven (as of 3:00 p.m. ET on Friday). Some of the market narratives responsible for the selling pressure included the unwinding of some of the Fed rate cut expectations, the Trump administration’s shift in tone on Ukraine, fresh tariff announcements, and weakness among select mega-cap technology names.

Energy topped this week’s sector leaderboard on solid gains in WTI crude oil, along with some bargain hunting amid reasonable valuations and muted sentiment — not easy to find these days. Utilities also outperformed this week, despite some weakness in the bond market and losses by some of the more popular AI power demand plays such as Vistra (VST) and Constellation (CEG). Materials lagged, weighted down by outsized losses in Freeport McMoran (FCX) after the copper mine shutdown in Indonesia. Alphabet (GOOG/L) and Meta (META) were drags on the communication services sector, an outperformer this week, but still the top-performing sector in 2024 with more than a 25% total return. This sector mix translated into outperformance for the value style over growth this week, while small caps lagged their large cap counterparts.

International Equities: A strong dollar as Fed rate cut expectations pulled back and rising geopolitical risk in Europe weighed on international equities this week. Valuations of international markets remain very compelling, but fundamentals, capital flows (reflected in the greenback’s recent bounce), and relative strength trends suggest further outperformance in 2025 may be difficult. Political uncertainty and tariffs weighed on some key European markets this week, including Switzerland and France, while German equities have not gotten much help from stimulus. The British and Japanese markets hung in there this week.

Turning to emerging markets (EM), the lackluster performance by the Indian market was attributable to a big hike in H-1B visa fees. The country’s technology sector sends a lot of immigrant labor to the U.S. South Korea was another weak spot as U.S. trade talks have stalled.

Fixed Income, Currency, and Commodity Markets

Fixed Income: Core bonds, as per the Bloomberg Aggregate Bond Index, traded lower on the week, as Treasury yields, across the Treasury yield curve, moved higher due to stronger-than-expected economic data released during the week. Corporate credit spreads, for both high yield and investment grade markets, were mostly unchanged on the week and remain at or near secular tights.

The national muni market (as per the Bloomberg Municipal Index) has underperformed most taxable alternatives this year and has lagged the Bloomberg Treasury index by more than 2.5% (pretax) in 2025. Treasury market volatility has weighed on returns, but the primary driver of underperformance has been a lack of investor demand to offset record amounts of new issuance. So far this year, states and local municipalities have issued over $453 billion of new bonds, which is 18% higher than last year’s issuance at this time.

However, while total investor flows have lagged new issuance, over the past few months, investors have re-allocated into munis at the fastest pace since 2007. Year-to-date demand, which is primarily retail driven, has added a net $33 billion in fund flows, with nearly half of those flows coming in the past quarter. As such, with the favorable interest rate environment of late and better supply/demand technicals, munis have outperformed Treasuries by over 1% quarter-to-date. And while supply challenges will likely remain in the near term, starting yields remain the best predictor of future returns, and with the recent steepening, the intermediate parts of the muni curve offer attractive tax-equivalent yields in the 7% to 9% range (for the highest tax bracket investors). As such, we think the intermediate part of the muni market remains a compelling option for those investors who need tax-exempt income.

Commodities and Currencies: The broader commodities complex advanced this week amid a five-day winning streak. A rebound in the energy space underpinned the advance as West Texas Intermediate (WTI) crude rallied over 4% to close back above support at $65. The advance was supported by continued threats from the White House regarding sanctions on countries importing Russian oil, along with a Ukrainian drone strike on a Russian refinery. The restarting of U.S. oil exports to China next month and a bullish stockpile report further underpinned buying pressure in the space. Metals also had a strong showing this week, with precious metals outperforming. Platinum and palladium notched double-digit gains, while gold and silver closed at record highs. Copper rose 2.5% after a deadly accident at an Indonesian mine disrupted supply to the market. The U.S. Dollar Index rose 0.5% and recaptured resistance at the 50-day moving average (dma). A potential double bottom in the dollar has developed, but it will take a move above 100.25 to confirm the pattern.

Economic Weekly Roundup

The Fed’s preferred inflation metric, the core PCE deflator, showed signs of normalcy in August. Monthly core inflation grew between 0.10% and 0.26% for six consecutive months now.

Highlights from PCE report (Aug.):

• Real personal spending rose 0.4% for the past two months, suggesting economic growth in Q3 could approach 2% annualized when all the data is collected.

• Annual rate of core inflation was roughly unchanged at 2.9% but we do see risks of a 3-handle for September data.

• Core services ex housing rose 0.33% from a month ago, pushing the annual rate up to 3.40% from 3.29% in July. Inflation in hotels, restaurants, and vehicle repair (who hasn’t been recently shocked with their car mechanic’s bill?) all contributed to the monthly rise in consumer prices. Consumer demand is keeping upward pressure on these categories.

Bottom Line: If businesses remain in a “low hire – low fire” mode, the job market should remain stable enough to keep the economy out of recession but at the same time, add frustrations for the Fed interested in easing rates without stoking greater inflation pressure.

New home sales rose dramatically in August even though average prices are up from a year ago. The 3-month average sales rate is 713k, up from 656k in July.

Highlights from New Home Sales (Aug.):

• The South region experienced an outsized gain in sales as more buyers took advantage of rate buydowns.

• The most recent stats revealed that 80% of D.R. Horton’s financed buyers used mortgage rate buydowns, up from 74% the previous year.

• Builders are offering more incentives, but not necessarily price cuts, to entice prospective buyers into the market.

• It takes 3 months to establish a trend for new houses sold, so it’s too early to forecast a meaningful contribution this quarter from residential investment in the GDP equation. But, investors should keep their eyes on the residential market in the coming months.

• Since a “sale” is defined as a deposit taken or sales agreement signed, this can occur prior to a permit being issued.

Bottom Line: As rates could decrease in the coming months, investors should see the residential market bottom out and become less of a drag on overall economic growth. If housing recovers, the economy will more likely skirt a recession and if that’s the case, risk assets historically perform well in a non-recessionary rate-cutting cycle.

The Week Ahead

The following economic data is slated for the week ahead:

• Monday: Pending Home Sales (Aug), Dallas Fed Manufacturing Activity (Sep)

• Tuesday: FHFA House Price Index (Jul), S&P Case-Shiller 20-city and National Home Price Indexes (Jul), MNI Chicago PMI (Sep). JOLTS Jobs Report (Aug), Conference Board Consumer Confidence Report (Sep), Dallas Fed Services Activity (Sep)

• Wednesday: MBA Mortgage Applications (Sep 26), ADP Employment Change (Sep), S&P Global U.S. Manufacturing PMI (Sep final), ISM Manufacturing Index (Sep), Construction Spending (Aug), Wards Total Vehicle Sales (Sep)

• Thursday: Challenger Job Cuts (Sep), Initial Jobless Claims (Sep 27), Continuing Claims (Sep 20), Factory Orders (Aug), Durable Goods Orders (Aug final), Capital Goods Orders and Shipments (Aug final)

• Friday: Change in Nonfarm, Private, and Manufacturing Payrolls (Sep), Unemployment Rate (Sep), Labor Force Participation Rate (Sep), Underemployment Rate (Sep), Average Hourly Earnings (Sep), Average Weekly Hours All Employees (Sep), S&P Global U.S. Services and Composite PMIs (Sep final), ISM Services Index (Sep)

• Important Disclos

IMPORTANT DISCLOSURES

This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors. To determine which investment(s) may be appropriate for you, please consult your financial professional prior to investing.

Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk.

Indexes are unmanaged and cannot be invested into directly. Index performance is not indicative of the performance of any investment and does not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results.

This material was prepared by LPL Financial, LLC. All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy.

Unless otherwise stated LPL Financial and the third party persons and firms mentioned are not affiliates of each other and make no representation with respect to each other. Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services.

Asset Class Disclosures –

International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. These risks are often heightened for investments in emerging markets.

Bonds are subject to market and interest rate risk if sold prior to maturity.

Municipal bonds are subject and market and interest rate risk and potentially capital gains tax if sold prior to maturity. Interest income may be subject to the alternative minimum tax. Municipal bonds are federally tax-free but other state and local taxes may apply.

Preferred stock dividends are paid at the discretion of the issuing company. Preferred stocks are subject to interest rate and credit risk. They may be subject to a call features.

Alternative investments may not be suitable for all investors and involve special risks such as leveraging the investment, potential adverse market forces, regulatory changes and potentially illiquidity. The strategies employed in the management of alternative investments may accelerate the velocity of potential losses.

Mortgage backed securities are subject to credit, default, prepayment, extension, market and interest rate risk.

High yield/junk bonds (grade BB or below) are below investment grade securities, and are subject to higher interest rate, credit, and liquidity risks than those graded BBB and above. They generally should be part of a diversified portfolio for sophisticated investors.

Precious metal investing involves greater fluctuation and potential for losses.

The fast price swings of commodities will result in significant volatility in an investor's holdings.

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