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 Cut
In a week that saw the Federal Reserve resume interest rate cuts, the S&P 500 rose by 1.22%, with the Nasdaq up 2.21% and the Dow Jones rallying 1.05%. The so-called Goldilocks rally, where economic conditions are perceived to be 'just right,' was in full flow as positive investor sentiment ensured all three indices posted fresh record highs to finish the week.
- Thursday saw four major indices post a rare feat: When you add in the Russell 2000, Thursday was the first time since November 2021 that all four major benchmarks closed together at fresh highs. This feat has only occurred on 25 other days this century.
- Goldman Sachs raises S&P 500 price target to 6,800 points: Analysts at Goldman Sachs (GS +0.74%) increased their year-end price target for the S&P 500, expecting further 0.25% rate reductions at the two remaining Fed meetings this year, which could further provide investor confidence and lower recession risks.
2. What to Watch This Week
Stock Advisor recommendation Stitch Fix (SFIX 1.66%) will report after market hours on Wednesday. While it's expected to post another quarterly loss, investors will be hoping it's smaller than forecast, like last quarter.
- A good barometer for property sector health: KB Home (KBH 0.25%) should release earnings on Wednesday following the closing bell, with any guidance on the impact of interest rate cuts on housing demand being closely monitored.
- Providing clues for future monetary policy direction: Friday sees the release of the core Personal Consumption Expenditures (PCE) index, with the Fed's preferred inflation measure expected to rise to 3% from 2.9% last month.
3. Earnings and Data Dominate Thursday
Hidden Gems rec Accenture (ACN 2.23%) is set to post results on Thursday ahead of the market opening, with updates expected on government contract spending and AI offering rollouts.
- Beat earnings expectations three times in the past year: Costco (COST +1.37%) is due to post strong earnings on Thursday after the closing bell, backing up last quarter's performance as cautious consumers drive demand.
- Updates on the health of the economy: The third estimate for Q2 Gross Domestic Product (GDP) is expected to hold at 3.3%, with initial jobless claims likely to rise from 231k to 240k for the week.
4. Berkshire's 20x Return on BYD Ends
Berkshire Hathaway (BRK.B +2.52%) has fully exited its stake in BYD according to regulatory filings, ending a 17-year investment that provided a 20x return for Warren Buffett and his team.
- Charlie Munger referred to BYD as a "damn miracle": Back in 2009, Munger said some thought he and Buffett had gone crazy following the 10% stake taken in BYD, but said he believed it was a great company run by extraordinary people.
- BYD domestic sales fell for a fourth straight month in August: The reduction in stake reflects the broader struggles in the EV space, with the biggest rival to Tesla (TSLA 5.09%) experiencing a quarterly profit fall for the first time in three and a half years.
5. Munger Mondays
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?"
Today, we're asking you to share a key risk with friends and family that could lead you to lose money in one of your existing investments, or become a member to hear what your fellow Fools are saying!