The Fed Raised Rates. Here’s What September Really Meant.
September has a reputation as a rough month for markets, and this one lived up to it. But the biggest story wasn’t a stock or a sector. It was interest rates.
Rates Took Center Stage
On September 16, the Federal Reserve raised its benchmark rate by a quarter point, to a range of 3.75% to 4.00%. That’s the first increase since July 2023, and the vote was unanimous.
Why now? Inflation has been stubborn, and oil is a big part of the reason. With the Strait of Hormuz still closed amid the conflict with Iran, Brent crude pushed toward $107 a barrel late in the month. Here in Canton and across Cherokee County, most of us feel that at the pump long before it shows up in a government report.
The job market gave the Fed one more reason to act. The economy added 162,000 jobs in August, roughly three times what economists expected. Strong hiring plus sticky inflation meant the Fed had less reason to wait.
The bond market felt it. The 10-year Treasury yield climbed above 5.2%, its highest level since 2007. That’s the rate that tends to drive mortgage rates — something every home buyer and seller in our area is paying attention to right now.
By the Numbers
The three major indexes told three different stories in September:
The Dow Jones Industrial Average fell about 4.3%. The Dow leans more heavily on industrial and economically sensitive companies — the kind that feel higher borrowing and energy costs first.
The S&P 500 slipped about 0.5%.
The Nasdaq Composite gained about 1.9%, as technology stocks held up better than the rest of the market.
Zoom out and the year still looks solid. Through September, the S&P 500 is up 11.8%, the Dow is up 5.9%, and the Nasdaq Composite is up 15.6%.
The month did end with some relief. On September 30, the Fed’s preferred inflation gauge (PCE) came in at 3.4% over the past year, below the 3.7% economists expected. Core PCE, which strips out food and energy, was 3.0% versus 3.3% expected. Part of that improvement came from a change in how the government measures a few categories of prices. Even so, markets lowered the odds of another hike at the Fed’s October meeting to roughly 35%, down from 50% the day before.
And the AI spending story isn’t slowing down. Micron Technology, which makes memory chips used in AI data centers, reported quarterly revenue of $54.2 billion after the market closed on September 30 — up from $11.3 billion in the same quarter a year ago.
Where I Stand
Higher rates cut both ways. For anyone carrying a mortgage, a home equity line, or credit card debt, they’re a headwind. For savers, the flip side is that yields on cash are higher than they’ve been in years — which makes it a good time to check whether your cash is actually earning what it could.
A 4% drop in the Dow in a single month is uncomfortable. It’s also not unusual. The Fed meets again on October 28, and I’ll be watching oil, inflation, and the bond market closely. A good plan is built for years, not weeks, and one choppy month doesn’t change that.
If you’re wondering whether your plan still makes sense with rates moving higher, reach out. I’m right here on Main Street in Canton, and I’m always glad to talk it through.
— Jack Shampine, CPFA™, J. Lyndon Financial
Source(s)/Reference(s)
FSchonberger, Jennifer. “Fed raises interest rates by a quarter point in unanimous decision, marking first hike in 3 years.” Yahoo Finance, September 16, 2026.
“US adds 162,000 jobs in August, raising Fed rate hike expectations.” Al Jazeera, September 4, 2026 (citing U.S. Bureau of Labor Statistics and CME Group FedWatch Tool).
“U.S. Treasury Yields Hit Near 20-Year High.” Babypips.com, September 28, 2026.
“PCE inflation eases to 3.4% — cooling the case for another Fed rate hike.” Yahoo Finance, September 30, 2026 (citing U.S. Bureau of Economic Analysis and CME Group FedWatch Tool).
Associated Press. “How major US stock indexes fared Monday 8/31/2026,” August 31, 2026, and “How major US stock indexes fared Wednesday 9/30/2026,” September 30, 2026. Monthly percentage changes calculated from AP closing levels.
Micron Technology, Inc. “Micron Technology, Inc. Reports Record Fiscal Fourth-Quarter and Full-Year 2026 Results.” Press release via GlobeNewswire, September 30, 2026.
The opinions voiced are for general information only and are not intended to provide specific advice or recommendations for any individual.
All performance referenced is historical and is no guarantee of future results. Investing involves risk, including possible loss of principal. All indices are unmanaged and may not be invested into directly.
Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services. Investing involves risks including the loss of principal.