Kevin Matras

While October is known for being the most volatile month for stocks, it typically ends higher. Not surprising since Q4 is historically the best quarter for stocks. Pullbacks are normal, and I expect the S&P to finish 2025 with 20%+ gains—driven by AI momentum and rate cuts.

Stocks fell on Fri after the US threatened 100% tariffs on China over rare earth export curbs. China controls 60% of production and 90% of processing. Talks may still happen at APEC later this month, but tensions rise as both policies take effect in November.

Markets have shrugged off shutdowns before — and they’re doing it again. Since 1980, the S&P rose in 9 of 10 shutdowns, averaging +1.69%. Only decline was 1990 of -3.60%. But recession fears and down market were already in play before that.

The Fed cut interest rates yesterday by 25 bps as expected. They also suggested two more rate cuts this year (more than the 2 they previously predicted), and raised their economic growth forecast. Bullish developments for both the economy and the market.

Core CPI steady at 3.1% y/y. This comes on the heels of core PPI easing to 2.8% vs. last month’s 3.7%. Fed expected to cut rates next week. Market wasting no time in climbing to new heights. Small-caps finally breaking out.

After a record -911K downward revision to job gains through the 12-mo period ending Mar 2025, a Fed rate cut next week looks likely. But first comes Wednesday’s (9/10) PPI wholesale inflation report. Core rate is expected +0.3% m/m, but easing to 3.5% y/y from 3.7%. (8:30 AM ET.)

The BLS revised job growth down by -911K for Apr 2024 to Mar 2025 (or roughly -75,917 jobs per month). The biggest cut in 16+ years. Last year’s revision was -818K, later adjusted to -598K. The Fed is likely to cut rates next week (9/17). Odds are 25 bps, but could be 50 bps.

Today’s jobs data revisions from April 2024–March 2025 are expected to support cutting rates next week. Last year’s revisions slashed -818K jobs — the largest drop in 15 years. This round may cut between -470K to -740K jobs, raising additional doubts about labor market strength.