Stocks couldn’t maintain their positive momentum last week, yet major indexes remain close to all-time highs. For investors and retirees alike, this raises the question: where do we go from here?
Last Week’s Market Performance
Despite the lack of sustained upward movement, the declines were modest across the board:
- Dow Jones Industrial Average: down 0.02%
- S&P 500: down 0.35%
- Nasdaq Composite: down 0.70%
- Russell 2000: down 0.77%
- Foreign Stocks: down 0.52%
- Emerging Markets: down 0.67%
Meanwhile, bond yields trended modestly higher, with the 10-year US Treasury ending Friday at 4.174%.
Inflation: The Numbers vs. Reality
The Core Personal Consumption Expenditures (PCE) came in relatively flat at 2.9%, suggesting contained inflation. But I find this hard to accept at face value.
Walk into any grocery store, restaurant, or car dealership, and you’ll feel the reality that many are experiencing daily. I wouldn’t be surprised to see this number elevate over the next few months as tariff-related costs continue working their way through the economy.
Housing Market: A Bright Spot?
Last week’s home sales report offered some encouraging news. The 3-month average of home sales increased from 656,000 to 713,000 units.
If mortgage rates do move lower as many expect, the housing market could provide additional economic support. Additional supply of homes would certainly be welcomed by most, especially younger buyers who’ve been priced out in many markets.
What’s Driving Stocks Forward?
Currently, the market is betting on two key factors:
- The AI revolution continuing to lift corporate productivity and profits across sectors
- Fed rate cuts providing additional stimulus over the coming months.
But how sustainable are these drivers? Time will tell.
Critical Week for Jobs Data
The Federal Reserve cited a slowing labor market as justification for their recent rate cut. This week, both the Fed and investors will digest crucial employment data for September:
- Tuesday: JOLTS (Job Openings) report
- Wednesday: ADP Employment report and ISM Manufacturing
- Thursday: Challenger Job Cuts, Factory Orders, and Durable Goods
- Friday: Jobs report, unemployment rate, and ISM Services
After four months of tepid job creation, the September numbers, along with any revisions, will be front and center. Another weak jobs report could provide the Fed with additional rationale for further rate cuts.
The Tariff and Technology Question
Because of tariffs, are companies revisiting their hiring needs? How much work can AI and technology effectively replace human workers?
Consider this: Walmart, as cited in the Wall Street Journal, stated they’re looking to infuse more AI and technology to enhance productivity. This trend is accelerating across Corporate America and it has real implications for employment and wage growth.
Market Direction: The Bulls vs. The Bears
With stocks fully valued by most measures, where do we go from here?
It’s hard to think gloom and doom as markets continue pushing toward new highs. Consider the positives:
- Low unemployment rate (for now)
- Corporate profits still trending upward
- Consumers spending with continued strength
- A President who cares about stock market performance more than he may admit
But the negatives are real and mounting:
- Tariff impacts on costs and competitiveness
- Our ballooning national debt
- Potential government shutdown risks
- Significant political divisions
- Ongoing geopolitical conflicts
- Record-high margin debt levels
Yet none of these concerns have meaningfully dented stock market optimism. At least not yet.
What to Watch Moving Forward
For retirees and those planning for retirement, three key indicators deserve close monitoring:
- Consumer spending patterns
- Will higher costs finally slow household purchases?
- Employment trends
- How quickly will job creation slow, and where?
- Interest rate direction
- Both 2-year and 10-year Treasury yields will shape bond returns and borrowing costs
These factors will ultimately determine whether current market valuations can be sustained—or if a more significant correction lies ahead.
Final Thoughts
Markets rarely move in straight lines, and the current environment feels particularly uncertain. For investors, this reinforces the importance of staying diversified, maintaining appropriate cash reserves, and avoiding the temptation to time the market based on short-term headlines.
As always, thank you for reading. If you found this week’s market update helpful, please share it with friends and family who might benefit from staying informed about economic and market developments.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.
All market data sourced from The Wall Street Journal, September 27, 2025.
