Recap | Week Ahead | Wealth Effect

Wealth Effect Feedback Loop:

Economic theory that as asset values (like stocks or homes) rise, consumers feel richer and spend more. This increased spending stimulates the broader economy, which can further boost asset values, reinforcing the initial rise in wealth in a continuous cycle.

Last week's market recap:

The S&P 500 closed the week up .72%. Year-to-date the index is up 17.52%
NASDAQ closed the week up 2.25%. YTD the index is up 23.50%
U.S. Aggregate Bond index closed the week down -.57. YTD the index is up 6.80%
10-Year Treasury Rate increased, ending the week at 4.11% up from 4.02% the prior week
- Fed Funds Target rate was lowered to 3.75-4.00%
The 1-Year Treasury is yielding 3.70%
A 6 Month Treasury is yielding 3.83%

The week ahead:

Private Sector Employment Report
Consumer Sentiment
Corporate Earnings (Busy Week): AMD, Palantir, Uber, Pfizer, McDonald’s, BP, Humana and many more

Quick Comments:

As expected the Fed cut rates, but a further reduction in the policy rate at the December meeting “is not a foregone conclusion.” On navigating policy “in the fog”: Because of the federal government shutdown causing data gaps, Powell said, the Fed must proceed cautiously. “What do you do if you’re driving in a fog? You slow down.”
- This caution slightly spooked the bond market.
Corporate earnings are coming in better than expected and the A.I. tailwinds remain intact.
Top down (big picture)… economic activity looks strong. Interest Rates continue to trend lower. We have personal and corporate tax cuts in 2026. Trade-policy disruptions and tariffs seem to be mostly behind us.
Unless we see a major change in the headlines, most investors should use volatility to improve their positions.

Source: JP Morgan: Chart of the Week

As always, let us know if you have any questions.

Best,

CRA Investment Committee

Matt Reynolds CPA, CFP®

Tom Reynolds, CPA

Robert T. Martin, CFA, CFP®

Gordon Shearer Jr., CFP®

Jeff Hilliard, CFP®, CRPC®

Joe McCaffrey, CFP®

Phillip Tompkins, CFP®

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