September 2025 Investylitics

Horizon Advisor Network Investment Committee September 8, 2025

Executive Summary

The US stock market, as measured by the S&P 500 index, continues to grind higher with little in the way of significant downturns or pullbacks. With markets at or near all-time highs, the committee would not be surprised to see volatility pick up in the coming months.
In addition to continued uncertainty about the near-term path of inflation due to the impacts of tariffs, the job market has slowed, creating fewer jobs than expected, while also experiencing negative revisions. This has led to the unemployment rate continuing to rise slowly.
This has opened the door for the Federal Reserve Bank to focus on the employment side of its dual mandate instead of singularly focusing on inflation and rising prices. In his August 2025 speech at Jackson Hole, Chair Jerome Powell signaled that potential interest rate cuts were warranted due to a slowing labor market.
The markets have responded positively to the potential for lower interest rates. However, it is essential to remember that if the Fed lowers rates due to a slowing economy or rising unemployment, it may not mean smooth sailing and good news in the future.
The committee continues to recommend maintaining a disciplined diversification and raising cash for future needs with markets at current levels. Markets don't go in straight lines forever, and it is vital to maintain reasonable expectations for future returns.

The Horizon Advisor Network Investylitics Committee members met on the afternoon of Monday, September 8th, as markets continue to grind higher with little in the way of downturns since the tariff-induced market pullback that we experienced from February 19th to April 8th of this year, when many U.S. stock indices pulled back 20% or more. We also know that, based on historical seasonality patterns, the August to October timeframe has generally resulted in lower returns and higher volatility, as shown in our first chart below. With markets at or near all-time highs, the committee would not be surprised to see volatility pick up in the coming months.

In addition to continued uncertainty about the near-term path of inflation due to the impacts of tariffs, the job market has slowed, creating fewer jobs than expected, while also experiencing negative revisions. This has led to the unemployment rate continuing to rise slowly. This has opened the door for the Federal Reserve Bank to focus on the employment side of its dual mandate, rather than singularly focusing on inflation and rising prices. In his August 2025 speech at Jackson Hole, Chair Jerome Powell signaled that potential interest rate cuts were warranted due to a slowing labor market. His central message was the difficult balancing act the Fed faces between its dual mandates of stable prices and maximum employment, as employment risks have increased while inflation remains a concern.

Subsequently, the August 2025 U.S. jobs report showed a significantly weakening labor market, with job growth slowing to 22,000 new positions, well below expectations, and the unemployment rate rising to 4.3. The data confirmed a trend of stalling employment, with downward revisions showing the economy actually lost jobs in June, the first such loss since the pandemic. The recent reports have led to a phenomenon known as “bad news is good news.” This means that despite the downturn in the labor market, which is bad news, the markets are focusing on the fact that the Fed will now restart interest rate cuts. Remember that the Fed cut rates 50 basis points in September 2024, followed by 25 basis point rate cuts in November and December. The markets are now pricing in a more than 90% probability of at least a 25 basis point rate cut when the Fed meets on September 16th and 17th.

As you can see in the chart above, stocks and bonds have historically performed well when the Federal Reserve resumes cutting interest rates after a pause, such as the one we have experienced since December. As always, past performance certainly does not guarantee future returns. However, it is essential to remember that if the Fed lowers rates due to a slowing economy or rising unemployment, it may not mean smooth sailing and good news in the future.

As we look at how the rest of the economy is responding to the economic backdrop, you can see in our final chart below that there has been no real change in the overall indicators over the last two months from the recession dashboard provided to us by ClearBridge.

According to their report, trade policy concerns have diminished over the past two months as a series of trade deals have been negotiated. Uncertainty has also been reduced by the passage of the One Big Beautiful Bill in July, which clarifies questions around tax policy and provides incentives for corporations to invest while also boosting their free cash flow generation in many cases. The combination of incentives to invest and additional capital to do so should ultimately lead to job creation, although this process does not typically unfold overnight.

The committee continues to recommend maintaining a disciplined diversification and raising cash for future needs, given current market levels. Markets don't go in straight lines forever, and it is vital to maintain reasonable expectations for future returns. As always, should you have any questions regarding your unique goals or situation, please do not hesitate to reach out to your advisor. We are here to help you navigate the current landscape and continue moving toward your preferred future. Thank you again for your trust and confidence.

The views stated in this piece are not necessarily the opinion of Cetera Advisors LLC and should not be construed directly or indirectly as an offer to buy or sell any securities. Due to volatility within the markets, opinions are subject to change without notice. Information is based on sources believed to be reliable; however, their accuracy or completeness cannot be guaranteed. Past performance does not guarantee future results.

Investors cannot invest directly in indexes. The performance of any index is not indicative of the performance of any investment and does not take into account the effects of inflation and the fees and expenses associated with investing.

A diversified portfolio does not assure a profit or protect against loss in a declining market.

Re-balancing may be a taxable event. Before you take any specific action be sure to consult with your tax professional.

INVESTYLITICS TEAM OF HORIZON ADVISOR NETWORK

Jesse Hurst - Senior Wealth Manager - Chair, Impel Wealth Management

Nathan Ollish - Senior Financial Advisor - Impel Wealth Management

Clint Gautreau, Financial Advisor - Horizon Financial Group

Kevin Myers, Financial Advisor - ATL Global

Grace Hayden MacNaught, Financial Advisor - The Planning Studio

Dusty Green, Financial Advisor - Spencer Financial Inc.

Sincerely,

Jesse W. Hurst, CFP®, AIF®
Senior Financial Planner and CEO

*Award Recipient Jesse Hurst

Forbes: Best-in-State Wealth Advisors Award received by Jesse Hurst, Senior Wealth Advisor, (2018-2024). The Forbes ranking of Best-In-State Wealth Advisors, developed by SHOOK Research, is based on an algorithm of qualitative data, rating thousands of wealth advisors with a minimum of seven years’ experience and weighing factors like revenue trends, assets under management, compliance records, industry experience, and best practices learned through telephone and in-person interviews. Portfolio performance is not a criteria due to varying client objectives and lack of audited data. Neither Forbes nor SHOOK receive a fee in exchange for rankings. Research summary as of April 2024: - 44,990 nominations received, based on thresholds - 23,876 invited to complete online survey - 20,412 telephone interviews - 4,926 in-person interviews at Advisor's location - 1,507 virtual interviews. Listing in this publication and/or award is not a guarantee of future investment success. This recognition should not be construed as an endorsement of the advisor by any client. No compensation was provided directly or indirectly by the recipient for participation or in connection with obtaining or using the third-party rating or award.

¹ This recognition and the due–diligence process conducted are not indicative of the advisor's future performance. Your experience may vary. Winners are organized and ranked by state. Some states may have more advisors than others. You are encouraged to conduct your own research to determine if the advisor is right for you.

² Portfolio performance is not a criterion due to varying client objectives and lack of audited data. SHOOK does not receive a fee in exchange for rankings.