Goldilocks Rally Continues: Market Insights for September 22, 2025

Breakfast News: Goldilocks Rally Continues

September 22, 2025

Friday's Markets

* S&P 500: 6,664 (+0.49%) * Nasdaq: 22,631 (+0.72%) * Dow: 46,315 (+0.37%) * Bitcoin: $115,401 (-1.79%)

1. Markets Rally to Records After Fed Rate Cut

The markets continued their upward trajectory fueled by the Federal Reserve's recent interest rate cuts. The S&P 500 advanced by 1.22%, the Nasdaq surged 2.21%, and the Dow Jones Industrial Average gained 1.05%. This "Goldilocks rally," characterized by seemingly ideal economic conditions, propelled all three indices to new record highs as investor confidence remained strong. Notably, Thursday marked a rare occasion where the S&P 500, Nasdaq, Dow, and Russell 2000 all closed at record highs simultaneously – a phenomenon that has only occurred 26 times this century. This synchronized rally underscores the breadth of market optimism. Goldman Sachs has revised its year-end price target for the S&P 500 to 6,800 points, anticipating further rate cuts by the Fed in the remaining meetings of the year. This suggests a continued expectation of favorable market conditions and reduced recession risks.

2. Key Events to Watch This Week

* **Stitch Fix (SFIX -0.88%) Earnings:** The Stock Advisor recommendation, Stitch Fix, is slated to report earnings after market close on Wednesday. Investors will be closely watching to see if the company can narrow its losses, building on the positive momentum from last quarter. * **KB Home (KBH -1.71%) Earnings:** As a key indicator of the housing market's health, KB Home's earnings release on Wednesday (post-market) will be scrutinized for insights into the impact of interest rate cuts on housing demand. * **Core PCE Index:** The release of the core Personal Consumption Expenditures (PCE) index on Friday will provide crucial clues about future monetary policy. The Fed's preferred inflation gauge is expected to rise to 3% from 2.9% the previous month. Any deviation from this expectation could significantly influence market sentiment.

3. Thursday: A Day Dominated by Earnings and Economic Data

* **Accenture (ACN 0.48%) Earnings:** Hidden Gems pick Accenture will release its earnings report before the market opens on Thursday. Updates on government contract spending and the progress of its AI initiatives will be closely monitored. * **Costco (COST -0.05%) Earnings:** Costco is expected to post strong earnings on Thursday after the closing bell, building on its success from the previous quarter as value-conscious consumers continue to drive demand. * **GDP and Jobless Claims:** The third estimate for Q2 GDP is projected to remain steady at 3.3%. Initial jobless claims are anticipated to increase slightly from 231,000 to 240,000 for the week, providing further insights into the overall economic health.

4. Berkshire Hathaway Exits BYD Investment

Berkshire Hathaway (BRK.B 0.46%) has completely divested its stake in BYD, according to regulatory filings. This marks the end of a 17-year investment that yielded a remarkable 20x return for Warren Buffett and his team. While the investment proved highly successful, the decision to exit reflects the evolving landscape of the electric vehicle market. Charlie Munger famously praised BYD as a "damn miracle." However, BYD's domestic sales have declined for four consecutive months, indicating broader challenges in the EV sector. The company recently experienced its first quarterly profit decline in three and a half years, highlighting the increasing competition and shifting market dynamics.

5. Munger Mondays: Inversion Thinking

Charlie Munger famously said, "Invert, always invert: Turn a situation or problem upside down. Look at it backwards. What happens if all our plans go wrong? Where don't we want to go, and how do you get there?" This week, consider sharing a key risk with friends and family that could potentially lead to losses in one of your current investments. Alternatively, join the community to explore the perspectives of fellow investors!