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Weekly Market Recap: Markets Cool as Inflation Softens and Energy Powers Ahead Thumbnail

Weekly Market Recap: Markets Cool as Inflation Softens and Energy Powers Ahead

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Market Overview

U.S. equities took a breather after recent record highs. The S&P 500 slipped -0.3%, the Dow Jones lost -0.2%, the Nasdaq fell -0.6%. Value outperformed growth for the week, as energy stocks surged +4.7% on rising oil prices, while utilities also gained +2.8%. Communication Services was the weakest sector (-2.7%), as Meta and Google were dragged down by Trump’s approval on a deal to keep TikTok available in the U.S. 

International markets struggled under the weight of a stronger dollar and geopolitical risk. MSCI EAFE lost -0.4% while MSCI EM dropped -1.1%, with India and South Korea posting notable weakness.

Federal Reserve Insights and Economic Roundup

Treasuries sold off modestly, pushing the 10-year yield up to 4.20%. Investment grade corporates slipped -0.4% while high yield fell -0.2%. Municipals underperformed earlier in the year but have seen a sharp rebound recently, with quarter-to-date returns now outpacing Treasuries by over 1% as inflows improve. Intermediate muni yields remain compelling at 7–9% on a tax-equivalent basis for top-bracket investors.

On the data front, inflation remained in-line with expectations with the core PCE up 2.9% YoY. Real consumer spending advanced +0.4% for a second month, helping Q3 GDP track near 2%. Services inflation (hotels, restaurants, and vehicle repairs) remains sticky, suggesting the Fed will tread carefully in cutting rates. Meanwhile, new home sales jumped to a three-month average of 713k, fueled by rate buydowns and incentives. Builders like D.R. Horton report nearly 80% of financed buyers are using buydowns, hinting at stabilization in housing.

In commodities, WTI crude oil rallied +4% to reclaim $65, aided by renewed geopolitical tensions and tighter supply dynamics. Gold and silver closed at record highs, while platinum and palladium posted double-digit weekly gains. The U.S. dollar rose +0.5%, adding pressure on international markets.

The Week Ahead

  • Monday: Pending Home Sales (Aug), Dallas Fed Manufacturing (Sep)
  • Tuesday: FHFA House Price Index (Jul), Case-Shiller Home Price Indexes (Jul), Chicago PMI (Sep), JOLTS Job Openings (Aug), Consumer Confidence (Sep), Dallas Fed Services (Sep)
  • Wednesday: MBA Mortgage Applications (Sep 26), ADP Employment (Sep), ISM Manufacturing Index (Sep), Construction Spending (Aug), Vehicle Sales (Sep)
  • Thursday: Challenger Job Cuts (Sep), Weekly Jobless Claims, Factory & Durable Goods Orders (Aug)
  • Friday: Nonfarm Payrolls (Sep), Unemployment Rate, Labor Force Participation, Average Hourly Earnings, ISM Services Index (Sep)