In September, investors paid close attention to inflation. The Federal Reserve raised interest rates for the first time since 2023, and bond yields and oil prices both rose. Stocks changed little overall, but some sectors performed better than others. At the same time, consumers became less optimistic about the economy.
Why Did Interest Rates Move Higher in September?
The rate increase came as the Federal Reserve continued its focus on inflation. The latest inflation report showed that prices were still rising, while the economy and job market remained relatively strong. Bond yields also went up, including those for longer-term Treasury bonds. Higher yields can mean higher borrowing costs.
How Did Higher Interest Rates Affect Stocks?
Technology and other companies connected to artificial intelligence continued to perform well. Meanwhile, companies that are more sensitive to higher interest rates generally had a more difficult month.
Investors did not move away from stocks. Instead, they shifted toward areas that were performing better. Strong corporate earnings also helped support stock prices.
Why Did Higher Oil Prices Add to Inflation Concerns?
Oil prices rose as conflict in the Middle East continued to disrupt oil transportation and supply. Higher energy prices can raise costs for consumers and businesses and add to inflation. That matters because inflation remains a key factor in the Federal Reserve’s interest rate decisions. By late September, there were some signs that oil supplies could improve, but the situation was still uncertain.
What Was Happening in the Economy?
Recent employment data showed the job market didn’t change much. Jobs were added in August, and the unemployment rate stayed about the same.
Consumers were less optimistic in September, with concerns about future business conditions and fuel prices affecting how they felt about the economy. Despite those concerns, the economy continued to grow.
What This Means for Investors
In September, interest rates and oil prices increased, while corporate earnings remained strong.
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Tom Hine is a CERTIFIED FINANCIAL PLANNER® professional and owner of Capital Wealth Management. With over 30 years of experience, Tom works with individuals and families on financial planning, retirement strategies, and investment management. He has a particular passion for special needs financial planning, shaped by his personal experience helping raise his sister Amy, who was born with a severe chromosomal condition. Tom understands the emotional and financial challenges that come with caring for a loved one with disabilities and helps clients navigate complex issues like preserving government benefit eligibility, coordinating Special Needs Trusts and ABLE accounts, and long-term care planning. With offices in Glastonbury and Wilton, CT, Tom serves clients across Connecticut and throughout the U.S. Schedule a complimentary introductory meeting with Tom.
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