Two babies!! - Mag Seven Ride Again, Lower Interest, and Flying with Cam

November 2, 2025

SHUTDOWN DRAMA GETTING MORE INTENSE: The U.S. government shutdown news is getting a bit louder as the effects manifest. I traveled to Birmingham, Alabama, last week for some meetings, and I was concerned about delays and air traffic controllers working two jobs. We had some minor delays, but nothing serious. But air travel will get worse if the shutdown continues. The food stamp issue is rising to the forefront of the news. None of these issues has been moving the markets, but they create more divisiveness and less confidence in our government, and just create more sourness in general in the public mood.

THE FED LOWERS RATES AGAIN: Last week, the Fed met and announced its decision to lower its key interest rate by another 0.25%. It was not unanimous, as one Fed governor voted for a 0.5% decrease, and one voted for no decrease. It looks as though the labor market will remain somewhat weak going into 2026, and inflation will remain relatively tame. As such, more cuts in 2026 look likely. But Fed Chairman Powell said that a further cut in December (when they next meet) is not likely because the government shutdown is limiting their access to data. Said Fed Chair Powell, "What do you do if you're driving in a fog? You slow down." By this, he means that without full data, lowering rates in December would not be prudent. In this way, he acted in a manner the markets liked, but dampened investors' spirits by lowering expectations for another 2025 cut.

TECH LEADS AGAIN: It was a week led by the tech companies again. The week started well after positive China-US trade discussions over the weekend. Fed Chairman Powell's commentary after the 0.25% rate cut dampened investors' moods a bit mid-week. But earnings reports from the Magnificent Seven (Nvidia, Apple, Microsoft, Alphabet, Amazon, Meta, and Tesla) helped push the NASDAQ Composite up by 2.24% for the week. Amazon reported faster-than-expected increases in AI-related revenue, and its stock rose nearly 10% on Friday. Nvidia became the world's first $5 trillion company, and Apple and Microsoft topped $4 trillion. The Magnificent Seven now represents about 38% of the S&P 500's market capitalization. Small U.S. stocks reversed a bit as the Russell 2000 decreased by 1.36%. With sparse economic data, corporate earnings reports will continue to drive markets, and so far, third-quarter earnings reports have been positive. This coming week, Palantir, Uber, McDonalds, Pfizer, BP, and many other big names will be reporting third-quarter earnings.

LONGER-TERM PERFORMANCE: Below are the annualized three-year and five-year numbers for these same indices.

THE U.S. AND SEMICONDUCTORS: There are two parts to the semiconductor industry, design and manufacturing. The U.S. still dominates the design phase, contributing about 51% of the overall industry's value and innovation. However, the U.S. accounts for only 8% of the manufacturing of semiconductors. Moreover, the manufacture of advanced process semiconductors, the ones needed for AI, supercomputers, etc., has been dominated by Taiwan, which manufactures 68%. The U.S. has been trying to catch up with the CHIPS Act of 202,2 which committed $53 billion to domestic production and over $600 billion in private investment since 2020. The U.S. share of advanced semiconductor manufacturing in 2022 was 0%. It is now projected to be 28% by 2032.

U.S. HOME PRICES: According to Freddie Mac, home prices in the U.S. decreased slightly (0.04%) in September. That was the sixth straight month of small declines. Compared with one year ago, prices are 1% higher.

CHINESE MANUFACTURING: For the seventh straight month, China's factory activity contracted in October. This is based on reporting by China's National Bureau of Statistics. Its index of manufacturing activity slipped to 49 from 49.8 (anything below 50 indicates contraction in activity).

ONE OF MY FORMER STUDENTS IS JUMPING INTO POLITICS!: When I was a high school teacher, one of my students was Jacob Ngirablosch. As one of our tallest students, he also played on our basketball team, and I played with him quite a bit on our outdoor basketball court. I had Jacob in class for both years that I taught, first in World History and then Civics. He is now running for public office in Palau in the Ngaraard State. I wish him the best! (One of my other former students has already served as governor of Ngarchelong State. Yes, I know how to pronounce these places.)

IS THAT CAM NEWTON?: Last week, my son and I traveled to Birmingham, Alabama, for company-related meetings. We came back on Tuesday. We were in the main cabin, but as we were getting ready to take off, the last person to board in first class had a very distinctive look. I looked at Logan and said, "That's Cam Newton!" Logan looked and said, "You're right. Why is he flying to Philadelphia?" The next day, I saw that Cam was part of a contingent of announcers at a college football game in Delaware. (For those of you who do not know, Cam is a very tall, recently retired NFL quarterback who dresses in a rather distinctive style.)

Have a great week!

Our purpose is to honor God by helping our clients see the objective, find the path, and navigate past the obstacles to a more prosperous future.

Douglas R. MacGray, J.D., C.F.P. ®

President

Stonecrop Wealth Advisors, LLC

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(610) 628 4545

dmacgray@stonecropadvisors.com

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SOURCES:

TECH LEADS AGAIN: https://www.wsj.com/finance/stocks/tech-earnings-extend-nasdaq-hot-streak-4ae3e7d0?mod=stocks_news_article_pos3

THE FED LOWERS RATES AGAIN: https://www.ftportfolios.com/Commentary/EconomicResearch/2025/10/29/navigating-the-fog AND https://www.wsj.com/opinion/federal-reserve-rate-cut-jerome-powell-inflation-f1c64a50?mod=Searchresults&pos=2&page=1

THE U.S. AND SEMICONDUCTORS: https://www.ftportfolios.com/Commentary/EconomicResearch/2025/10/30/progress-in-semiconductor-self-sufficiency

U.S. HOME PRICES: https://www.freddiemac.com/research/indices/house-price-index

CHINESE MANUFACTURING: https://apnews.com/article/china-factory-economy-us-trade-2181298f18f96fa90dc6790b909f06c1

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Investment advisory services offered through Stonecrop Wealth Advisors, LLC, a Registered Investment Advisor with the U.S. Securities and Exchange Commission.

SDG

*S&P 500: This is a measure of the performance of the 500 largest companies in the United States, and it a common index to track the performance of U.S. equity markets, especially the large cap markets.

*MSCI All Country World Index X US: This is a broad measure of the performance of worldwide equity markets excluding the United States.

*Bloomberg U.S. Aggregate: This is a measure of the U.S. bond markets.