September 2025 | Monthly market recap
The “Powell put” helped drive U.S. stock market to another month of gains
All eyes were on the Federal Reserve in September as the markets waited for a much-anticipated cut in the federal funds rate. Chairman Jerome Powell delivered with a 25 basis-point reduction in short-term rates and investors approved. The underlying strength of the U.S. economy remained something of a question mark, with inflation still higher than hoped for and corporate hiring sluggish by most accounts.
ONE-MONTH PERFORMANCE as of 9/30/25 | ||||
|---|---|---|---|---|
U.S. large caps (S&P 500) | U.S. small caps (Russell 2000) | International developed (MSCI EAFE) | Emerging markets (MSCI EM) | Investment-grade bonds (Bloomberg Agg) |
3.65% | 3.11% | 1.91% | 7.15% | 1.09% |
Source: Boston Partners; all data via individual index providers. Past performance does not guarantee future results. See below for definitions.
Stocks have rarely been this expensive
For the fourth month in a row, the S&P 500 Index notched a new all-time high, but whether earnings can keep pace with the market’s performance is another story. The price/earnings ratio for the S&P over the trailing 12 months recently stood at around 29x—that’s a figure we’ve only seen during the Dot-Com Bubble, the Global Financial Crisis, and the COVID-19 meltdown. While there isn’t an accompanying crisis in the broader economy today, investors may begin to regard these lofty multiples with more scrutiny when Big Tech’s earnings season kicks off at the end of October.
KEY ECONOMIC INDICATORS | |||||
|---|---|---|---|---|---|
GDP | Fed funds rate | 10-year UST | Inflation (CPI) | Jobs | |
Most recent | 3.8% | 4.00%–4.25% | 4.16% | 2.9% | 22,000 |
Month prior | –0.6% | 4.25%–4.50% | 4.23% | 2.7% | 79,000 |
Sources: Gross domestic product (GDP) via the U.S. Bureau of Economic Analysis. Federal funds rate via the Federal Reserve Bank of St. Louis (FRED). 10-year U.S. Treasury (UST) rates via the U.S. Department of the Treasury. Inflation (CPI) and jobs (non-farm payroll figures) via the U.S. Bureau of Labor Statistics. All “most recent” data is for the month of September and is compared with the month prior, except CPI and jobs figures, which reflect a one-month lag, and GDP, which is compared with the prior quarter.
International stocks posted gains as the U.S. dollar weakened slightly
Developed-market international stocks notched modest gains in September, but the real story was with emerging markets, which eclipsed the returns for both international and U.S. equities. With valuations and concentration risk an ongoing dual threat to U.S. stock market performance, it’s no surprise that investors continue to look overseas for more attractively valued opportunities. The U.S. dollar was down slightly for the month, which acted as a tailwind for foreign holdings.
Federal Reserve expected to cut rates again in October
The Federal Reserve may be feeling the pressure to keep the cuts coming: Markets currently anticipate a nearly 99% likelihood of another 25 basis point reduction during the Fed’s October meeting and a roughly 84% chance of one more in December. Failure to meet those expectations has historically led to spikes in volatility, but time will tell when exactly the Fed feels rates have fallen far enough.
Bond markets recorded gains as yields dipped lower
Intermediate-term, investment-grade bonds were up in September, driven in part by expectations—and then the realization—of lower interest rates. Spreads in the corporate debt market generally tightened during the month amid low perceived default risk. Federal spending remains an area of concern for investors, but conditions in the bond markets were otherwise supportive.
Upcoming key events
- October 15: Consumer Price Index data release for September
- October 21–29: Tesla, Alphabet, Meta, Microsoft, Amazon, Apple report earnings
- October 29: Federal Open Markets Committee meeting
Chart of the month
Historically, September has tended to be the worst month of the year for stocks, with losses over the past five, 10, and 20 years. The exception to the rule? When the Fed cuts interest rates in a non-recessionary environment. That’s exactly what happened this past month, and the S&P 500 responded with a 3.65% gain.
Source: Bloomberg, as of October 1, 2025. Past performance does not guarantee future results.
To learn more, contact us at [email protected].
Important information
Boston Partners Global Investors, Inc. (Boston Partners) is composed of three divisions, Boston Partners, Boston Partners Private Wealth, and Weiss, Peck & Greer (WPG) Partners, and is an indirect, wholly owned subsidiary of ORIX Corporation of Japan (ORIX).
The views and opinions expressed may change based on market and other conditions. This material is provided for informational purposes only and should not be construed as investment advice. There can be no assurance that developments will transpire as forecasted. Actual results may vary. No investment strategy or risk management technique can guarantee return or eliminate risk in all market environments.
The Bloomberg U.S. Aggregate Bond Index tracks the performance of intermediate-term investment-grade bonds traded in the United States. The Consumer Price Index is a commonly used measure of inflation that tracks the variation in prices paid by typical consumers for retail goods and other items. The MSCI EAFE Index tracks the performance of large- and mid-cap equities traded across global developed markets, excluding the United States and Canada. The MSCI Emerging Markets Index tracks the performance of large- and mid-cap equities traded in global emerging markets. The Russell 2000 Index tracks the performance of the 2,000 smallest companies traded in the United States. The S&P 500 Index tracks the performance of the 500 largest companies traded in the United States. It is not possible to invest directly in an index.
The breakpoints for capitalization ranges should be viewed only as guideposts and will change over time. In general, FTSE Russell (which maintains a number of stock-market indexes based on company size) considers small-cap stocks to have market caps of between $150 million and $7 billion, mid caps to have market caps between $7 billion and $150 billion, and large caps to be those companies with market caps above $150 billion.
8037497.7
