MW Equal-weight S&P 500 sees longest winning streak since 2021 amid September rate-cut expectations
By Christine Idzelis
'There's money now looking for other opportunities' besides Big Tech, says Charles Schwab's Liz Ann Sonders
The U.S. stock market saw August gains, with its rally broadening lately.
The bull market in U.S. stocks has been broadening as investors anticipate the Federal Reserve will lower interest rates in September, with the equal-weight version of the S&P 500 booking its longest stretch of monthly gains since 2021.
"There's no question that there's been some broadening" in the rally, said Liz Ann Sonders, chief investment strategist at Charles Schwab, in a phone interview Friday. "You've seen this sort of grinding, steady improvement in the participation" in the S&P 500 index, she said.
Shares of the Invesco S&P 500 Equal Weight ETF RSP, an exchange-traded fund that equally weights stocks in the index, climbed 2.7% in August. That marked a fourth straight month of gains, the ETF's longest monthly winning streak since the stretch through May 2021, FactSet data show.
"There's money now looking for other opportunities" besides Big Tech, said Sonders.
The Roundhill Magnificent Seven ETF MAGS - which seeks to equally weight the seven closely watched Big Tech stocks in its portfolio, including Apple Inc. $(AAPL)$, Microsoft Corp. $(MSFT)$, Google parent Alphabet Inc. $(GOOGL)$, Amazon.com Inc. (AMZN), Nvidia Corp. (NVDA), Tesla Inc. and Facebook parent Meta Platforms Inc. (META)- rose slightly more than 2% in August to book a fifth straight month of gains. That was its longest stretch of monthly gains since the period through March 2024, according to FactSet data.
The S&P 500 SPX, an index that is heavily weighted toward Big Tech stocks, gained 1.9% in August for a fourth straight month of gains as the bull market continues this year. U.S. stocks are up so far in 2025 against the backdrop of a resilient U.S. economy, with the Bureau of Economic Analysis estimating on Thursday that gross domestic product expanded at an annual rate of 3.3% in the second quarter.
"The overall story is still one of a decent amount of economic resilience," said Sonders. "The primary support for our economy has been the strength in the labor market."
Next week, investors will get a hotly anticipated reading on U.S jobs growth in August, with the report from the Bureau of Labor Statistics due out on Sept. 5. The jobs reports for July had been surprisingly weak. Investors are expecting that the Federal Reserve will lower its benchmark interest rate at its next meeting in September due in part to downside risks to the labor market.
Meanwhile, U.S. inflation is running above the Fed's 2% target, with a report Friday from the Bureau of Economic Analysis showing that it increased in July at an annual rate of 2.6%, as measured by the personal-consumption expenditures index. Core PCE, the Fed's preferred inflation gauge that excludes volatile food and energy prices, rose last month at a year-over-year rate of 2.9%.
The PCE inflation readings were in line with Wall Street's expectations.
Read: Key U.S. inflation gauge creeps higher, but not high enough to stave off Fed interest-rate cut
The U.S. stock market closed lower Friday, with José Torres, senior economist at Interactive Brokers, saying in emailed comments that investors appeared to be "grabbing profits," as September is historically the worst month for returns.
The S&P 500 fell 0.6% Friday, while the Dow Jones Industrial Average DJIA retreated 0.2% and technology-heavy Nasdaq Composite COMP dropped a sharp 1.1%, according to Dow Jones Market Data. All three benchmarks saw modest weekly losses but ended August with monthly gains, with the S&P 500 seeing its longest monthly winning streak since the period running through September 2024.
"Although September is typically the weakest month of the year on average, we don't see anything on the horizon to knock this bull market off its path," said Chris Zaccarelli, chief investment officer for Northlight Asset Management, in emailed comments Friday.
"If anything, if there is any volatility in September or October, which would be typical for this time of year, it will likely prove to be a great buying opportunity as we are setting up to rally into year-end, especially if the Fed is cutting rates outside of a recession," he said.
The S&P 500 ended Friday up 9.8% year to date , finishing August just 0.6% below its record closing peak notched Thursday, according to Dow Jones Market Data.
The U.S. stock market will be closed Monday for the Labor Day holiday.
-Christine Idzelis
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August 29, 2025 19:49 ET (23:49 GMT)
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