Weekly Hotline: October 3, 2025
Investor speculation and exuberance surrounding AI deals helped markets bounce back this week, despite growing uncertainty and the U.S. government shutdown.
MACROECONOMIC UPDATE
- Pending Home Sales for Existing Homes increased 3.8% from last year, however they remain at a historically low level as the housing market remains fairly stagnant.
- Consumer Confidence from the Conference Board declined 3.6 points in September, pulled lower by a 7.0 drop in the Present Situation Index as consumers’ views of the current economy deteriorated. Read our Market Insight to dive deeper into this report.
- The Institute for Supply Management (ISM) Manufacturing Purchasing Managers’ Index (PMI) rose slightly from 48.7% to 49.1% but remained in contraction (<50%). The manufacturing sector has been in contraction for 33 of the last 35 months as businesses struggle with rising prices.
- The ISM Services PMI fell 2 percentage points to 50%, sitting exactly at the breakeven point between expansion and contraction. Respondents noted softening business conditions as price pressures also continue to weigh on businesses.
- The Jobs Report, which includes the unemployment rate, has been delayed due to the U.S. government shutdown. Read our Market Insight on what shutdowns usually mean for markets.
TECHNICAL UPDATE
- Investor exuberance took off this week, pushing our Artificial Intelligence Index to a new high. With investor sentiment stretched to extremes, it is essential to watch this index as a tumble in these beloved speculative stocks could prove to have wide-reaching impacts on the broader market.
- InvesTech’s Housing [Bubble] Bellwether Barometer remains below its recent high and well below its all-time high from over one year ago, as investor excitement over the potential for lower mortgage rates following Fed rate cuts has already fizzled.
InvesTech Model Fund Portfolio
The Model Fund Portfolio is 57% invested in quality equity ETFs, 5% in an intermediate Treasury ETF, and 38% cash. The cash portion of the Portfolio (38%) is held in short-term Treasurys or a money market fund to provide an attractive yield and defensive buffer.
