Equity Market Strength Continues Amid Steady Employment and Inflation

Matthew Rubin Chief Investment Officer

 

1. Strong economic momentum in Europe and Asia pushed international equities ahead of U.S. returns this year, broadening market leadership and reducing reliance on U.S. mega-cap stocks.
2. Jobless claims remained well below long-term levels last week, while solid September durable goods orders showed business investments holding firm into the end of the third quarter.
3. Last week’s Producer Price Index data showed headline inflation supported by energy costs, but continued moderation in core prices suggests the broader inflation backdrop is gradually cooling.

 

1. Global Market Strength Persists as International Equities Outpace the U.S.

Global equity performance gained momentum last week, adding to what has already been a strong year for investors. The S&P 500 has returned over 17% year-to-date, including dividends.¹ If current trends continue, the S&P 500 could potentially see its third consecutive year of substantial returns of 15% or higher, though past performance is not indicative of future results.

International stocks have performed even better. Equity markets in Germany, France, Japan, and the U.K. all reached record highs in 2025, signaling broad participation in the global rally. As a whole, international stocks, as measured by the MSCI World ex USA Index, are up over 24% through last week’s close, well ahead of U.S. benchmarks.¹ Europe has benefited from improving economic momentum, while Japan continues to show resilience despite U.S. auto tariffs. Emerging markets have also posted solid gains, helped by strong results from technology-oriented countries such as Korea and China.

2. Jobless Claims Stay Low as Business Investment Remains Strong

Initial jobless claims came in lower last week at 216,000, down from 222,000 and below expectations for 230,000.² Continuing claims held close to their prior level at 1.96 million.² Even with hiring slowing in several sectors, layoffs have not picked up meaningfully. Claims remain far below the 30-year average of about 364,000 and also below the 2015–2019 average of roughly 245,000.² The data show a labor market that has cooled but is not experiencing broad stress. In our view, current conditions should still support consumer spending through the next few quarters.

September durable goods data delayed by the shutdown also arrived last week. Orders rose 0.5%, in line with forecasts.³ A large share of that strength came from communications equipment, which may reflect ongoing investment tied to the buildout of AI-related infrastructure. The report suggests that business spending held up well at the end of the third quarter, even as uncertainty around trade policy remained.

3. Producer Prices Hold Firm as Core Inflation Continues to Ease

September producer price inflation numbers were mixed last week. The Producer Price Index (PPI) held steady at a 2.7% annual pace in September, slightly above expectations for a small decline to 2.6%.¹ Energy costs played a clear role, rising 3.5% from a year earlier.² Core PPI inflation, which strips out food and energy, eased to 2.6%, compared with projections for a more modest decline to 2.7%.¹ These figures, delayed by the government shutdown, point to inflation that remains elevated even as price pressures in key categories continue to cool.

Energy’s influence on the headline number may also fade. Oil prices have dropped about 6% since the end of September.¹ Housing data shows a similar pattern of moderation. The S&P Case-Shiller National Home Price Index was up only 1.3% year-over-year through September.⁴ Shelter inflation in the CPI, still running at 3.6%, should continue to adjust as it aligns with slower home-price growth.¹

Together, these readings offer the Fed some reassurance that inflation is contained. This backdrop may support another rate cut in December as policymakers look to steady a labor market showing signs of cooling. Bond markets now price in an 83% chance of such a move.⁵

For the period ending 11/28/25.
* Small-cap stocks are represented by the Russell 2000^® Index. International stocks are represented by the MSCI EAFE. Bonds are represented by the Bloomberg US Aggregate Bond Index. Oil is represented by WTI Oil (West Texas Intermediate Oil), a benchmark for light, sweet crude oil and a primary measure for pricing oil contracts and futures in the U.S.

Sources
¹ YCharts
² U.S Bureau of Labor Statistics
³ U.S. Census Bureau
⁴ FRED
⁵ CME FedWatch

Disclosures

Cary Street Partners is the trade name used by Cary Street Partners LLC, Member FINRA/SIPC; Cary Street Partners Investment Advisory LLC and Cary Street Partners Asset Management LLC, registered investment advisers. Registration does not imply a certain level of skill or training.
Any opinions expressed here are those of the authors, and such statements or opinions do not necessarily represent the opinions of Cary Street Partners. These are statements of judgment as of a certain date and are subject to future change without notice. Future predictions are subject to certain risks and uncertainties, which could cause actual results to differ from those currently anticipated or projected.
These materials are furnished for informational and illustrative purposes only, to provide investors with an update on financial market conditions. The description of certain aspects of the market herein is a condensed summary only. Materials have been compiled from sources believed to be reliable; however, Cary Street Partners does not guarantee the accuracy or completeness of the information presented. Such information is not intended to be complete or to constitute all the information necessary to evaluate adequately the consequences of investing in any securities, financial instruments, or strategies described herein.
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We undertake no duty or obligation to publicly update or revise the information contained in these materials. In addition, information related to past performance, while helpful as an evaluative tool, is not necessarily indicative of future results, the achievement of which cannot be assured. You should not view the past performance of securities, or information about the market, as indicative of future results.
A Composite PMI is a single index that tracks economic activity by combining the performance of both the manufacturing and services sectors, providing a comprehensive overview of overall business conditions.
Nothing contained herein should be considered a solicitation to purchase or sell any specific securities or investment-related services. It should not be assumed that any of the securities transactions or holdings discussed were, or will prove to be, profitable.
The Consumer Price Index (CPI) measures the monthly change in prices paid by U.S. consumers. The Bureau of Labor Statistics (BLS) calculates the CPI as a weighted average of prices for a basket of goods and services representative of aggregate U.S. consumer spending. The CPI is a measure of inflation and deflation. The CPI report uses a different survey methodology, price samples, and index weights than the producer price index (PPI).
Additional Disclosures: International and Foreign Securities, Fixed Income Investments, the Consumer Price Index, the Producer Price Index.
Comparative Index Descriptions: The Standard & Poor’s (S&P) 500 Index, The Russell 200^® Index, The NASDAQ Composite Index, The MSCI EAFE Index, Dow Jones Industrial Average^® (Dow Jones or DJIA), The Bloomberg Barclays US Aggregate Bond Index (US Agg Bond), The CBOE Volatility Index (VIX). CSP2025061_37