What We're Watching in September

It may be back-to-school season, but markets never took a summer break. Equities are hovering near all-time highs, inflation progress is uneven but improving, and earnings have topped cautious expectations. The backdrop: a potentially pivotal policy moment after the Jackson Hole Economic Policy Symposium, where a September rate cut is now squarely on the table. A well-telegraphed, data-dependent cut would ease financing costs for households (mortgages, autos) and corporates (refinancing, capex, M&A); helpful tailwinds as consumers grapple with housing affordability and companies navigate tariffs and supply chains. 

Jackson Hole First: Why Powell’s Remarks Matter 

Chair Powell used Jackson Hole to signal the Fed is leaning toward easing—contingent on data—while previewing tweaks to the policy framework. Markets heard “gradual, credible relief,” not a pivot on autopilot. That balance is key: easier policy supports consumers and dealmaking without inviting a credibility hit to the Fed’s independence and agnostic approach to market dynamics. Importantly, officials indicated the 2% inflation goal remains a priority, although inflation has “stalled” above the 2% range according to recent data. Discussions and speculation around the Fed revisiting the 2% framework were speculated by the media and experts alike, but it is unlikely we will see any framework review—a debate we’ll watch closely, as some believe the 2% inflation target is somewhat arbitrary in a modern, tech-driven economy, even if it remains the anchor for now. 

A Stealth Bull: Records Amid the Noise 

Despite headline risk, we’re effectively in a stealth bull market. The Dow notched a fresh record in late August, as have the S&P 500 and NASDAQ Composite, an impressive feat given what the market has had to digest this year. What’s underneath? A very solid Q2 earnings season, among the better beat rates on record, even with tariff noise, and surprising strength in areas many assumed would lag (select commercial real estate like specialty/data-center REITs, and manufacturers and distribution/supply-chain names). To us, that’s evidence that strong management teams can navigate tough backdrops and still execute, and that is why a strategic approach to selecting high-quality names is critical in a headline-driven world. 

AI & the Megacaps: Spend vs. Payoff 

The hyperscalers of AI, like Meta, Google, Apple, etc., are on pace to spend hundreds of billions on AI infrastructure. Industry estimates put spending at $300-500 billion for 2025, with some views pushing higher. At the same time, an MIT-linked body of work pegs the failure rate of enterprise gen-AI pilots at roughly 95%, underscoring the gap between capex and realized return on investment (ROI). Add in eye-popping (and sometimes disputed) headlines about nine-figure compensation offers for elite AI talent, and the question becomes: does AI spending converge with ROI? Simply put: Is all this spending something or nothing? We’re watching leaders that pair disciplined AI investment with clear, measurable paybacks. 

Corporate Earnings: Beyond the Numbers 

Earnings season continues to be a positive story. Most companies are beating lowered guidance. It is a familiar model of managed expectations. What we are watching more closely is the return of forward guidance after a hiatus earlier this year. As companies regain visibility, the tone of earnings calls is increasingly confident, particularly in industrials and AI-related tech. 

Consumer discretionary sectors, however, are showing some cracks. Discretionary spending is moderating as airlines, hospitality, and restaurants are seeing some slowdowns since the post-COVID recovery began. It is a reminder that while headline numbers may still look strong, not all parts of the economy are benefiting equally. 

National Capacity: Intel, Security, and the State’s Role 

One development to watch: the U.S. government’s move to take about a 10% equity stake in Intel, framed partially as a bid to stabilize domestic chip capacity and secure critical AI-era infrastructure. Beyond Intel, it raises durable questions: where does national security end and industrial policy begin, and how far should the government go in shaping “strategic” tech? For investors, the takeaway is broader: U.S.-owned AI and infrastructure build-out will remain a policy priority, with potential implications for semis, equipment, and select utilities/industrial names. 

Chart of The Month

The Bureau of Labor Statistics (BLS) data for the 2025 school year show school-specific costs are still climbing, though at different speeds across categories. Prices for books and supplies were up 9.4% year over year as of latest reporting, while food at elementary and secondary schools (think cafeteria lunches) rose a more modest 3.3%. Elementary and high school tuition and fees sit at just above 3%, down from 2024 highs closer to 5%. On the other hand, College tuition is showing signs of rising up 2.4% at the latest recording, up significantly from the lows in 2021. 

The broader takeaway: even as headline inflation has cooled from prior peaks, school-related costs vary widely (from books and supplies to apparel and tuition-like items). For parents, prioritizing early purchases for fast-rising categories and comparison-shopping where inflation is cooler can help stretch dollars through the fall semester. Explore the BLS interactive to see which line items have driven your own back-to-school basket: Consumer prices for back-to-school spending.  

Chart of the Month Sources: Historical Data (1950–2022) - U.S. Energy Information Administration (EIA).  Future Projections (2025–2050) - EIA Annual Energy Outlook (AEO 2024); Princeton Net-Zero America Project; NREL Electrification Futures Study; IEA (International Energy Agency). 

This commentary is for informational and educational purposes only. Opinions are subject to change. Forward-looking statements cannot be guaranteed. Past performance is not a guarantee of future results. The information has been obtained from sources we believe to be reliable, but Carnegie has not independently verified the accuracy or authenticity of the information. The discussions, outlook, and viewpoints featured are not intended to be investment advice and do not consider specific investment objectives or risk tolerance you may have. All investments involve risks, including the loss of principal. 

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