The Pulse on the Economy and Capital Markets: September 2025

To Summarize: Stocks, bonds, and bitcoin delivered strong returns, with international markets outperforming the U.S. year-to-date and revived IPO activity fueling investors. The Federal Reserve’s initial rate cut, and expectations for more, have spurred investors to consider riskier investments. However, rate cuts reflect weakening economic conditions with consumer spending slowing since July, as tariffs have begun impacting essential and discretionary purchases.

The big takeaway – Higher earnings expectations for publicly traded companies are fueling market gains and supporting optimism for continued growth, despite tariffs highlighting a divided economy.

In the Markets: The markets have delivered strong results, with stocks and bonds leading the way. While international markets continue to outperform the U.S. year-to-date, many U.S. markets are reaching record highs. Bond markets have enjoyed another quarter of positive returns, climbing 2-3% this quarter and 6-7% for the year. Bitcoin has also advanced, up nearly 6% in September and 23% since January. The driving force behind this rally is robust earnings growth with AI and big tech earnings staying consistent and small and mid-sized firms outpacing expectations.

Revived IPO Activity Fuels Investors: The markets have entered a pivotal phase with policymakers prioritizing concerns of a weakening labor market over inflation. This development, plus earnings strength, revived IPO activity, and the Federal Reserve’s first rate cut of 2025 are fueling investor confidence and a pivot towards discretionary stocks. Investors are anticipating two further rate cuts this year and a steady pace of reductions through mid-2026, encouraging greater risk-taking and shaping a more dynamic investment landscape.

Consumer Spending Impacted by Tariffs: Despite exterior calm, consumers remain uneasy. After the spending surge during July’s Amazon Prime Day, growth has since slowed as consumers are prioritizing essentials and higher-income purchases over discretionary items. The weight of tariffs continues to impact the economy, leading to slower spending on furniture, clothing, and electronics, hitting lower- and middle-income families the hardest. The job market has also felt this strain with tariff-sensitive industries eliminating jobs even as others remain stable, indicating a divided economy.

Top Headlines: We’re reading about Costco, Sam’s Club, and BJ’s opening new locations as they gain younger members, forecasted 2025 sales in the restaurant industry have slowed, the U.S. apartment market occupancy rate eased in August, and the small business optimism index rose for the month of August.

Related resources:

• Retail: Club nation: Why Costco, Sam’s Club and BJ’s are opening new stores and gaining members
• Restaurants: The restaurant industry’s sales forecast for 2025 has dampened
• Commercial Real Estate: U.S. apartment market softens in August
• Small Businesses: Small business optimism improves again in August

Disclosures 

Investment advisory services are offered by Aprio Wealth Management, LLC, a Securities and Exchange Commission Registered Investment Advisor. Opinions expressed are as of the publication date and subject to change without notice. Aprio Wealth Management, LLC shall not be responsible for any trading decisions, damages, or other losses resulting from, or related to, the information, data, analyses or opinions contained herein or their use, which do not constitute investment advice, are provided as of the date written, are provided solely for informational purposes and therefore are not an offer to buy or sell a security. This commentary is for informational purposes only and has not been tailored to suit any individual. References to specific securities or investment options should not be considered an offer to purchase or sell that specific investment.   

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