September's Economy & Stock Market Update

This month John and I celebrate our 5-year anniversary of joining Signature Wealth / Raymond James. (Yay us!) It also marks our 5-year anniversary of writing these market commentaries for our clients.  (Thanks for reading!)  I’m embarrassed to say how much time we spend on these. The Useless Fact alone is sometimes the hardest part…but it’s also the only reason many even read these. (Looking at you Lindsay!)  A Scottish mathematician, Eric Temple Bell, coined a phrase: “Time makes fools of us all.”  I think of that phrase often when writing these.  So, with that said, here we go!

After two months of modest declines, the markets finally rebounded a bit in August.  While every major index was up, the Nasdaq led the way with nearly a 4% return.  Software companies, which were left for dead earlier this year, came alive in August, up +17%.  Nvidia had a blowout earnings report, up over 100% year over year, and forecasted another 70%+ growth for next year!  (The stock jumped 9% on that news).  Tesla and SpaceX jumped as well, for no discernable reason, up 18% / 32% respectively last month.  The big mover (and I mean BIG) was Moderna pharmaceutical which announced a breakthrough in mRNA vaccines for certain types of cancer.  The stock went atmospheric and gained 156% in August.  (Side note for human beings, not just investors: if this proves to be true and is the beginning stages of literally curing cancer…no words. What a time to be alive!)

The AI / momentum story continues to dominate the narrative every week, often with no fundamental reason for the swings in either direction.  As of right now, the momentum trade is down -10% from its high earlier this summer.  But the pain in many of the big momentum names is much worse. (Micron -25%, Intel -38%, & Corning -47% to name a few.)

Commodities were also big winners in August. Gold was up 9%, silver 15%.  Oil was volatile but ended the month up slightly as Iran continues to be unresolved. 

For us, the big news for investors was the drama in bond yields.  Yields are all moving higher, all over the world, and that’s not necessarily a good omen for stocks.  (More on that below).

Your takeaways for August: a decent month but mostly a sideways market as we’re still shy of all-time highs.  Value is beating growth this year, by a large margin.  Pockets of AI stocks are skyrocketing…this is very stock specific, however. Equal-weight is beating cap-weight, but that gap is shrinking.  At the index levels, things look boring; under the surface though, individual stock volatility is wild.  Bond rates are going up. 

Here’s the performance numbers YTD:

*Performance reflects index values as of market close on August 31, 2026.

Brokered CD Rates:

Annual percentage yields (APYs) of 08/26/2026. APY represents the interest earned based on simple interest calculations. Rates are subject to change and availability. Minimum purchase may apply. Please contact your financial advisor for complete information about brokered CDs, including charges and expenses.

It’s been a good year for stock investors so far.  Here’s some thoughts on what we like and don’t like for the remainder of the year. 

What we like:

Stocks are up double-digits for the past 3 years.  Profit margins and earnings are insanely good right now.  How good? S&P 500 earnings per share rose 52.6% in the second quarter.  That’s huge. (Typically, we’re shooting for 10%-ish.) Of course, that’s not sustainable at those levels.  (But that is next year’s problem.) American companies, as a whole, are firing on all cylinders right now. The trend is your friend, as they say.

What we don’t like:

For starters, seasonality is starting to kick in.  September through early October is typically not a great time for stocks.  According to Bloomberg, September is the only month of the year that has averaged a negative return since 1960.  (To be fair, September is only down -1% on average; that’s not the end of the world).  Still, that’s a checkmark in the negative column right now.

We also have midterms coming up.  You know those annoying election spambot calls / texts / emails?  Well, they’ve already started and they won’t end until November elections.  Midterms typically put a rain cloud over markets. Fortunately, rain clouds pass.  But until they do, that’s another checkmark in the negative column.

We also have the Iran war.  Gas prices aren’t terribly high, but they’re not exactly low either. (It’s a different story for diesel prices though!)  This will feed into inflation numbers at some point if they continue.  Consumers hate high gas prices. Checkmark in the negative.

Bond rates are going up.  This one is real and it has repercussions. There’s a cause-and-effect relationship with bonds vs everything else and we’re starting to see it.  In a nutshell: you invest in stocks for that 100-year average return of 8-10% right?  Bonds give us that stable, boring 4-5% return. Fine. But what if bonds are paying 6-7% instead?  That’s a pretty good return with zero stock market risk. So, if bond rates keep going up, stocks will typically come under some pressure.  (Why would you take the risk in stocks if you can simply own bonds and collect 6%?)  That’s the risk if bond rates keep increasing.  For now, they’re at the upper end of the “normal” range but they’re clearly going the wrong direction for stock investors.  (Note: this could also unwind itself very quickly as bond rates can fall just as fast as they went up). Checkmark in the negative column for now.

Potential rate hike. Inflation is still higher than where we want it.  Tariffs and the Iran war aren’t helping.  We’re starting to see hints of pressure on the consumer at retailers like Walmart but it’s anecdotal at best, for now. The new Fed chair, Walsh, is signaling a rate hike later this month.  That felt inconceivable a few months ago, but it feels very possible today.  Watch the next inflation report coming out Friday 11^th.  If that’s higher than we want, my money says we will get a quarter point rate hike this month.  Walsh may want to mark his territory and differentiate himself from Powell’s legacy of letting inflation get out from under him.  I’m not convinced markets have fully priced in a rate hike yet. Big checkmark in the negative column on this one.

Long story short, we expect more volatility in the very near term.  I won’t be surprised if we have a short-term, -5% market correction.  That’s not a prediction; it just wouldn’t be a surprise given this set up.

What does that mean for serious investors? 

Nothing at all. 

It simply means short-term volatility…but that’s the price of admission for investors. Also, perspective matters: the S&P has averaged nearly 20% a year for the past 3 years.  A couple of months of mediocre, or even negative, returns are more than reasonable. There’s buying opportunities in those pullbacks. In fact, those pullbacks are usually the thing that sets the stage for the next leg higher, which is our base case to close out the year.

Useless Fact of the Month:

We lost a national treasure this month with the passing Dolly Parton.  Regardless if you’re a country music fan or not, she resonated with all genres for her beautiful spirit and positivity. I can’t think of a more perfect American story: She grew up in poverty in a one-room log cabin in Tennessee and she left this world with a $500 million legacy.  She wrote over 3,000 songs, won 11 Grammys in her lifetime, and was inducted into the Country Music Hall of Fame. But she remembered where she came from and in 1995 opened the Dolly Parton Imagination Library, dedicated to her father who never learned to read or write.  Since then, they’ve given over 200 million books to children across the world. 

Dolly’s debut album, Jolene, had two songs that would go on to be huge hits still performed today. (It’s said that she wrote both “Jolene” and “I Will Always Love You” (IWALY) on the same night!)  Jolene is legendary but IWALY took on a life of its own.  And here is where your Useless Fact come in:

In 1974, Dolly released IWALY on her debut album.  It immediately resonated with fans.  One fan in particular became fond it of it: Elvis Pressley.  He loved the song so much that he wanted to record it.  This was a big deal! In 1974, if Elvis sang your song it was estimated to bring you well over $100,000! That’s an amazing feat for a young female country artist from Nowhere, TN. 

The problem is that in the early 1970’s, Elvis was still king and his manager, The Colonel, controlled him and demanded his customary 50% publishing and songwriting royalties for any song Elvis performed.  Dolly pushed back saying not only did she write it by herself but also recorded it by herself, long before Elvis even heard it.  So sure of themselves, the Col booked recording studio time for Elvis to sing the song.  However, less than 24 hours before recording was to begin, Dolly told The King, no…she would not give up her rights to the song that she created, it was all she had. 

In her biography, she is said to have gone home and sobbed for 24 hours.

Fast forward to the 1992 movie Bodyguard with Whitney Houston and Kevin Costner.  Whitney requested to have the song on the soundtrack, no matter the price.  She performed the song so spectacularly that Dolly would later say that the song had always been waiting to be performed by Whitney.  

Dolly would keep all the royalties from the song. 

In the end, it is estimated that Dolly Parton watched $100,000 walk out the door with Elvis back in 1974.  In return, she watched Whitney Houston make her $20 million in royalties from a song that Dolly had written in less than an hour some 20 years earlier.

Here’s to Dolly Parton and to every other kid that dreams big in the hollers of this amazing country!

John and I want to sincerely thank every one of our clients for the past 5 years.  You are the reason we’re here and it’s an honor to work with you all. And thank you to everyone who takes the time to read our little market commentaries.   

(And thank you to my girlfriend Kasia, who proofreads every one of these commentaries before they go to press for things that don’t make any sense or just sound stupid.  She catches way more than I’d like to admit!)

Any opinions are those of Sean Bokhoven and not necessarily those of Raymond James. Expressions of opinion are as of this date and are subject to change without notice. There is no guarantee that these statements, opinions, or forecasts provided herein will prove to be correct. Investing involves risk and you may incur a profit or loss regardless of strategy selected. Past performance is not indicative of future results.

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