The Market Update with EP Wealth Advisors Managing Director, Investments -
Adam Phillips, CFA^®, CAIA, CFP^®

Often quoted in major national media, Adam is a Chartered Financial Analyst (CFA^®), a CERTIFIED FINANCIAL PLANNER™ (CFP^®), and has been included on the Forbes NextGen Best-in-State Wealth Advisors 2019 list. He is a member of the CFA Society of Los Angeles and the CFA Institute. Adam helps establish asset allocation strategy as a member of the EP Wealth Investment Committee, which supports all EP Wealth Advisors and their clients. The Committee’s top-down approach to portfolio construction begins with an outlook on the economy’s likely direction, followed by the implications for different economic sectors and asset classes. This culminates in strategic selection of the individual stocks, bonds, mutual funds or other investments deemed most appropriate for each individual client’s portfolio.

Market Update: Fed Poised for Rate Cut
September 15, 2025 

This week’s Federal Open Market Committee (FOMC) meeting is in the spotlight as investors anticipate a widely expected rate cut. The main question: will it be 25 or 50 basis points? Our expectation is for a 25-point reduction, though differing views within the committee could spark some debate. 

Why Now? 

Recent labor market data has softened considerably. Initial jobless claims reached their highest level since 2021, signaling that the Fed’s employment mandate is under pressure. While some of this could be seasonal noise, the broader trend points to weakening conditions that justify action after nearly a year without cuts. 

The Inflation Puzzle 

The other half of the Fed’s mandate—price stability—remains uncertain. Core inflation (excluding food and energy) is hovering around 3%, above the Fed’s 2% target. Progress on inflation has stalled in recent months, and factors such as tariffs could keep pressure on prices. This uncertainty suggests the Fed may take a “wait and see” approach after September rather than committing to a steady pace of cuts. 

What It Means for Investors 

Equity markets have enjoyed an impressive run, with the S&P 500 up roughly 30% since April 8. However, elevated valuations leave markets more vulnerable to disappointment and surprises. Volatility could resurface, and while the long-term outlook for equities remains positive, investors should stay focused on their broader goals rather than short-term swings. 

As always, we encourage you to reach out to your advisor with questions about how these developments may affect your plan. 

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Video Summary: 

Well, the Fed Week is finally upon us. The Federal Open Market Committee will be meeting tomorrow, Tuesday, and Wednesday in one of their eight meetings for the year, and we expect them to announce a widely anticipated rate cut. The big question right now is whether this will be a 25 basis point cut or a 50 basis point cut. 

We believe it'll be 25 basis points just to get things started, but we do know there are opinions that vary within the committee. And so we expect some dissension, which we saw last time around as well. Now with the Fed. Proceeding with rate cuts here. I think there are some who believe that this is, uh, politically motivated or that they are succumbing to pressure from within the Trump administration. 

Now, there may be something to that, but we do think that the data now supports a Fed rate cut. If you look at the jobs numbers, there's a whole lot of labor market data that we've been getting over the last few weeks. And it shows clearly that the labor market is softening quite a bit. And this is one part of the Fed's dual mandate. 

It's seeking full employment in the economy, and the latest data suggests that they're starting to lose their grip a little bit. We actually saw last week that initial jobless claims rose to the highest level since 2021, and that's just one data point that we're looking at. Now, some of this could be noise from the fact that the period in which this was measured, it happened to coincide with a holiday. 

And so oftentimes the data gets a little bit noisy then, but we're seeing enough confirmation of labor market weakness to just to, to really talk this up to broader weakening within the labor market. So we think it's time for the Fed to get started after taking nearly a year off from rate cuts. Now, at the same time, what makes this really challenging right now for the Fed is the fact that the data support a rate cut right now. 

We're not quite sure what this means for future rate cuts after the September meeting. We do know that the other side of the Fed's dual mandate, price stability, is still a big question mark. There's a whole lot of uncertainty right now, and we can look at a lot of data here, such as various measures of core inflation, meaning excluding food and energy prices, that suggest inflation. 

Price. The rate of price growth in the economy is still well above where the Fed wants it to be, about 3%. You compare that to the Fed's 2% target, there is still a lot to be desired here. And they've, they've, uh, we've really seen progress on inflation stall out here in recent months, and we don't know whether. 

In, uh, the, all of this uncertainty around tariffs will keep that pressure on. Or if things like a weakening labor, uh, environment will actually bring inflation down. So that's a big question mark. It's something that continues to be debated, but it's why the Fed is likely to take a wait-and-see approach. 

Following this meeting now the market is now expecting the Fed to continue cutting rates after September. Um, but we'll see. We know that things can change very, very quickly. And so for now we're going to take it one meeting at a time. And like the Fed, we're going to continue to digest the data as we get it. 

What this means to investors. Look, we've really enjoyed a nice run. We're seeing the S&P 500 up 30% since the lows on April 8th. And so it's been a really nice time to be an equity investor. But we also know that things don't go in a straight line forever. And so as the market continues to grind higher here and, uh. 

With respect to a lot of these risks we don't think are, can't be justified, but we do acknowledge that valuations are higher and that means the market and investors are now more, more vulnerable to disappointment and surprises. And so we shouldn't be surprised to see volatility resurface here. We don't know necessarily what that catalyst would be, but it's always important to think long-term and just understand that. 

Volatility is something that comes with the territory when investing in risky assets. And so we take it, uh, we take what the market gives us, we stick on stick, uh, we remain focused on the long term and, and. We, we, we, you know, ride those, um, we, we take this ride on, uh, within the equity markets and, uh, we certainly want to see it move higher, but we know it's not a straight line. 

I'll look forward to catching up next week, and I'm sure we'll have a lot of interesting information to talk about coming out of this week's FOMC meeting. But I'll leave it here for right now. If you have any questions, please don't hesitate to reach out to your advisor. I'll see you next week.