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MARKET COMMENTARY

September 26, 2025

Bulls Tap the Brakes on Record-Setting Run

Below are the economic and market highlights for the week: 

  1. The personal consumption expenditures (PCE) price index rose 0.3% in August, putting the annual headline inflation rate at 2.7%. Core PCE, which excludes food and energy, rose 0.2% month-to-month and was up 2.9% year-over-year (YOY). The PCE report also showed tariffs having a limited pass-through effect on consumer prices. Goods prices were up only 0.1% on the month while services rose 0.3%. A modest rise plus an increase in personal income has allowed consumers to continue to spend. Personal consumption expenditures and income rose 0.6% and 0.4%, respectively. 

  2. Business spending continued to rebound in August as anxiety around tariffs subsided. August durable goods orders rose 2.90% to $312.1 billion, rebounding after two months of decline. Transportation equipment led the increase, up 7.90% to $110.2 billion. Nondefense capital goods excluding aircraft, a key indicator of business spending, climbed 0.60%.

  3. Strong pent-up demand and lower mortgage rates pushed new home sales higher. Sales surged 20.50% month-over-month to a seasonally adjusted annual rate of 800K, the highest level since January 2022. YOY, sales were up 15.4%. Strong sales pushed inventory lower to 490K, representing a 7.4 months’ supply, down from 9.0 months in July. Median prices also moved higher, up 1.10% from a year ago to $413,500. It was a different story however in the existing home sales market. Sales of previously owned homes ticked lower in August amid on-going affordability issues for buyers. Home sales slipped 0.20% to a seasonally adjusted annual rate of 4 million units from an unrevised 4.01 million in July. Total inventory also dipped 1.30% to 1.53 million units. At the current sales pace, inventory would last 4.6 months, unchanged from July. That is closer to the six to seven months considered a healthy balance between supply and demand. Despite the sluggish home sales market, the median sales price continued to rise, up 2.00% from a year ago to $422,600. That marked the 26th straight YOY increase. 

Bulls Tap the Brakes on Record-Setting Run

Bulls hit a wall of strong economic data and a looming government shutdown in their quest for another record-setting week. Initial weekly jobless claims slowed to 218K. That was their lowest level since mid-July, easing concerns over a potential wave of layoffs and further pressure on the labor market. Durable goods orders for August also showed it was back to business with business spending increasing for the second consecutive month, reversing its negative growth in Q2. The strong reports raised concerns that the Fed could be slower to cut interest rates. Fed Chair Jerome Powell in a speech to the Greater Providence Chamber of Commerce this week pointed to the challenging situation the central bank faces in managing elevated inflation risks while also looking to support a weakening labor market. He also threw cold water on the market’s recent bullishness, hinting stocks may be overvalued. His comments harkened to those made by Alan Greenspan in December 1996, when the then current Fed Chair described the market as irrationally exuberant. In retrospect, Greenspan correctly identified what proved to be the DotCom bubble, but not before markets rallied another 93% and when the bubble finally popped it never retrenched below December 1996 levels (albeit being incredibly destructive). Despite the strong reports and Powell’s remarks, markets were able to finish Friday’s trading session higher on an in line PCE report, supporting the case for at least one more Fed rate cut by year end. Aside from the brief tariff turbulence, investors have spent much of 2025 setting records. Thus far, the S&P 500 has set 20+ record highs on the prospect of lower interest rates and the hot AI trade. Lower rates and healthy economic data – the labor market excluded – points to a resilient economy which bodes well for market bulls. If the stars continue to align with strong data, corporate earnings, lower rates, and the AI-capex boom, investors could be well set for more record highs. 

The Week Ahead

Key reports include non-farm payrolls, manufacturing, and services.

The Year 2025: A Mathematical Milestone 

This year marks a mathematical milestone as a “perfect square” number. A perfect square is a number that is the product of an integer multiplied by itself. Examples include 1 (1×1), 4 (2×2), 9 (3×3), 16 (4×4), and so on. The year 2025 is a perfect square of 45 (45 x 45 = 2025). A perfect square year is a rarity in the calendar, and for many, a once-in-a-lifetime occasion. 

When Was the Last Perfect Square Year?

To find the last perfect square year before 2025, we look for the square of an integer just below 45, which is 44 x 44 = 1936. That means the last time there was a perfect square year was 89 years ago, before World War II. Prior to 1936, the previous perfect square year was 1849 (43 x 43), during the California gold rush and prior to the Civil War.  

When Is the Next Perfect Square Year?

Looking ahead, the next perfect square year will be 46 x 46 = 2116. So, after 2025, there won’t be another perfect square year for 91 years, making this perfect square year a truly rare numerical milestone. After 2116, the next perfect square year will be in 2209 (47 x 47), which is 95 years after 2116. These rare squares are becoming more profound as time passes.  People may have one or two perfect square years within their lifetime only. However, an individual born in 1937 who lived until age 86 would not have experienced a perfect square year.

Bonus Number Fact: The Digits of 2025

For math enthusiasts, 2025 is the year that keeps on giving us all the excitement. If we add up the numbers that comprise 2025, so 2 + 0 + 2 + 5, the sum is 9, which is also a perfect square (3²). Additionally, the sum of the cubes of one through nine is 2025 (13 + 23 + 33 + 43 + 53 + 63 + 73 + 83 + 93 = 2025). 

As we head into the final quarter of this perfect square year, we can “raise the root” for a year that didn’t just “add up” but rather “multiplied beautifully” and was anything but irrational.    

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