Never Forget

Today marks the 25th anniversary of the attacks of September 11, and according to the 9/11 Museum and Memorial, 100 million Americans are too young to remember that day. They have no doubt included several of my younger colleagues in their count. At the time, I was just a few years into my career in financial services, and I had the privilege of working with clients in both New York and Boston. On that Tuesday morning, I had already had several conversations with them before either plane crashed into Lower Manhattan and phone calls started rolling to ‘all circuits are busy’ messages.

In the days that followed, and during the longest closure of the New York Stock Exchange since World War II, it would have been hard to imagine how U.S. capital markets would respond in the decades that followed. At the time of the attacks, the U.S. economy was already in a recession that had begun in March 2001 and wouldn’t end until later that year. The S&P 500 was about midway through a 47% decline that lasted from March 2000 until October of 2022 as the dot-com bubble burst. Apple’s iPhone had yet to be invented and stocks still traded in fractions. It truly was a different era.

And yet, as we look back at the U.S. economy then, many metrics were surprisingly close to where we find ourselves today, including the 10-year U.S. Treasury yield in the high 4% range, 30-year mortgages in the mid to high 6% range and an unemployment rate with a 4-handle.

Many of you may have heard our Chief Investment Officer, George Hosfield, CFA, assert, “as go earnings, so goes the stock market” at our annual Investment Outlook events. While the dates do not line up perfectly, Bloomberg states that the aggregate S&P 500 corporate earnings increased from $6.69 in the third quarter of 2001 to $74.87 in the first quarter of 2026, for an annualized growth rate of 10.4%. Incredibly, and as you can see from the table above, the annualized return of the S&P 500 from the first day the stock market reopened on September 17, 2001, through yesterday was 10.32%!!!

In our business, we are lucky to form lifelong relationships, not only with our clients, but with our partners as well. As Jim Toes, CEO of the Security Traders Association, recently wrote: “As we remember those we lost and what was taken from us, let us also remember what was given to us: a sharper appreciation for the people in our lives.” With that positive legacy in mind, please think of those close to you and never forget September 11, 2001.

“To hike or not to hike?”
With all due respect to William Shakespeare, this is the question for Fed Chair Kevin Warsh and the Federal Open Market Committee at their meeting next week. This morning’s August Consumer Price Index (CPI) report of headline inflation at +3.4% and Core inflation at +2.4% year-over-year suggests the current 65-month streak of inflation above the Fed’s 2.0% target is likely to be extended. The Fed uses a similar Core PCE measure for their inflation target. The Committee will release its rate decision at 11 a.m. PT next Wednesday. As of yesterday, markets were already pricing in a 70% likelihood of a rate hike, and with today’s data in hand, that has increased to nearly 90% as of this writing. This will take the policy Fed Funds rate from its current range of 3.50-3.75% to 3.75-4.00%. With benchmark oil prices recently trading at or above $100 per barrel, market-based interest rates had already risen higher in recent weeks. This also likely explains why the increased certainty that the Fed will deliver its first rate hike since 2023 next week is driving a relief rally in both stocks and bonds today.

Takeaways for the Week

• Prices for both Brent and U.S. West Texas Intermediate (WTI) crude oil futures jumped to over $100 per barrel this week, their highest levels since mid-May
• The yield on the 10-Year U.S. Treasury Note touched 4.98% this week, its highest level since October 2023 when it briefly grazed 5.00%

Disclosure

The views expressed represent the opinion of Ferguson Wellman. The views are subject to change and are not intended as a forecast or guarantee of future results. This material is for informational purposes only. It does not constitute investment advice and is not intended as an endorsement of any specific investment. Statements of future expectations, estimates, projections and other forward-looking statements are based on available information and Ferguson Wellman’s views as of the time of these statements. Past performance may not be indicative of future results. Ferguson Wellman, Octavia Group and West Bearing do not provide tax, legal, insurance or medical advice. This material has been prepared for general educational purposes only and not as a substitute for qualified counsel who can determine how this information applies to you. We believe the information provided is from reliable sources but should not be assumed accurate or complete.

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