The investment landscape continues to show resilience, with key market indicators reaching new levels. Last week, the Federal Reserve’s first interest rate cut of 2025 provided a significant lift, spurring U.S. equity markets to new all-time highs.

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Market Summary: A Resilient Economy and Record Highs

 

The underlying U.S. economic data remains largely constructive, bolstered by solid consumer spending.

• Quick Take: U.S. retail sales and industrial production both exceeded economists' forecasts last week, while initial jobless claims fell. This signals a persistently resilient economic environment. Lower interest rates prompted homeowners to take advantage of refinancing opportunities, leading to an increase in mortgage applications.

• Equities Performance: Equities soared, with the S&P 500 gaining 1.2%, the Dow Jones Industrial Average advancing 1.1%, and the NASDAQ Composite rising 2.2%. Notably, the small-cap-oriented Russell 2000 set its first record of 2025, adding 2.2% for the week. Growth-oriented sectors led the performance, with investors cheering the Fed's rate cut and Chair Jerome Powell's confidence in the U.S. economy.

• Future Outlook: Analysts' S&P 500 earnings growth forecasts for 2025 and 2026 remain stable, projecting 9.4% and 13.1% year-over-year growth, respectively. Despite elevated valuations, which trade at 24.9 times 2025 estimates, these figures can persist absent accelerating inflation.

• Sector Focus: Artificial Intelligence (AI): AI advancements and capital investments continue to drive broad investment opportunities. This trend increases demand across multiple sectors, including semiconductor chip design, data capture, storage, processing, and security. Utilities also maintain a favorable long-term outlook as new demands from data centers and electric vehicles reshape energy consumption.

 

Number of the Week

 

5%. The increase in retail sales in August compared to a year earlier, highlighting the strength of the American consumer.

 

Term of the Week

 

Industrial Production. An economic indicator that reports the total value of the industrial output of a country or region, covering sectors like manufacturing, electricity, mining, and gas. This data reacts quickly to the business cycle's expansions and contractions, making it a valuable leading indicator of future employment and personal income data.

 

Financial Victory: How Proper Coordination with Your Estate Plan Helps You and Your Family Win

 

While current market movements are important, the true victory in financial planning is a coordinated strategy that ensures your wealth supports your family's future, no matter what happens. At Reliant Investment Management, we emphasize that your investment strategy should be closely aligned with your estate plan.

 

The Win for You and Your Family

 

Proper coordination between your investment management and estate plan is critical to protecting your legacy, minimizing friction, and maximizing wealth transfer efficiency. This alignment allows you to "win" by ensuring:

• Clarity and Honoring Your Intentions:

  • Avoiding Conflicts: You may have a will that dictates your assets go to your children, but if your beneficiary designations on a 401(k) or life insurance policy name an ex-spouse or are outdated, those accounts will bypass the will and go to the named beneficiary. Proper coordination ensures all documents and accounts align with your current wishes.

  • Smooth Transitions: By clearly outlining who makes financial and medical decisions (via Durable Powers of Attorney and Healthcare Directives) and who inherits your specific assets, you reduce the emotional burden and stress on your family during a difficult time.

• Maximizing Wealth and Tax Efficiency:

  • Minimizing Taxes: Your investment and estate strategies should work together to take advantage of tax-efficient wealth transfer methods, such as life insurance, specific trusts or gifting strategies, that minimize potential federal and state estate or income taxes for your heirs.

  • Asset Location: An integrated plan allows for the strategic placement of different investment types in the most appropriate accounts (taxable vs. tax-advantaged), a process called asset location, which can enhance the portfolio's after-tax return over the long term.

• Protecting Your Assets:

  • Guardrails for Heirs: Coordinated planning allows you to set up structures, like trusts, that provide asset protection for beneficiaries who may be minors, financially inexperienced, or susceptible to creditor issues. You dictate how and when they receive assets, not just if they do.​

By treating your investments and estate plan as two parts of a single, comprehensive strategy, you give yourself the peace of mind that comes from knowing your family is protected, your wishes will be honored, and your wealth will be transferred as efficiently as possible. We encourage you to review your estate documents and beneficiary designations with your financial and legal team regularly to maintain this crucial alignment.