Weekly Market Commentary - September 2, 2025
Week In Review
Despite a consumer inflation report that met consensus expectations and upheld the narrative supporting an imminent pivot in Fed monetary policy, technology sector headwinds and trade policy uncertainty depressed market sentiment and stalled the momentum of major U.S. equity indices. The PCE Price Index rose 2.6% year-over-year, identical to last month. That pace and a dovish Fed tone buoyed hopes for a September rate cut. Unfortunately, shares of U.S semiconductor stocks stumbled on reports of an advanced AI chip developed by Alibaba, a sign of rising competition. Additional ambiguity came in the form of trade policy, when a U.S. appeals court ruled that President Trump may have exceeded his authority to levy tariffs on U.S. imports. The S&P 500 submitted to the doubt, falling -0.1%.
This Week
In a holiday-shortened week, investor focus will be on the labor market. Analysts forecast 75,000 new jobs and an increase in the unemployment rate to 4.3%.3 Any divergence could impact markets and monetary policy.
Portfolio Theme
The S&P 500 earnings yield is the trailing twelve months earnings per share for all firms in the index divided by the index value at market close. As of August 15, 2025, the S&P 500 earnings yield estimate was 3.49%.4 The S&P 500 earnings yield is regularly compared to the U.S. 3-month Treasury bill yield to judge the stock market's valuation relative to bonds. The 3-month U.S Treasury bill yield on August 15, 2025, closed at 4.23%. 5 This means the current equity risk premium is negative. The historical record shows that subsequent equity performance may be unacceptable. Due to the prospect of interest rate cuts later this year, a concentration of capital in money market funds also poses serious potential reinvestment risk when rates eventually move lower. Simplicity offers bond portfolios that may soften equity market volatility while preserving current income.
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Data: Unless otherwise noted, data for charts, graphs, and tables is sourced from YCharts. Portfolio Themes chart sourced from State Street Investment Management.
1 Style box returns use various Russell indices tied to specific areas of the market cap (vertical) and style (horizontal) spectrums. Indices are not typically available for direct investment, are unmanaged, and do not incur fees or expenses.
2 Index Statistics: P/E Ratio – Displays the forecasted P/E ratio of the representative index ETF. Yield - Dividend-per-share divided by current share price. Table statistics are updated weekly. MSCI indices represent broad global and international equity markets. Indices are represented by iShares ETF proxies (IVW, IVV, IVE, ACWI, and ACWX).
3 MarketWatch.
4 YCharts.
5 YCharts. Past performance does not guarantee future results.
Weekly commentary and investment advisory services are provided by Simplicity Wealth, LLC a SEC Registered Investment Adviser. Registration does not imply a certain level of skill or training. The information provided is for informational purposes only and does not constitute any form of advice or recommendation. The information contained within has been obtained from various sources and is believed to be accurate at the time of publication.
