Mark on the Markets
September 2025

The Market Shines Through the Clouds of August

August and September have historically been the worst months for investors, specifically as measured by S&P 500 data compiled by the St. Louis Federal Reserve.

Since 1970, August has averaged an advance of just 0.13% (through 2024), the second-worst month, while September has recorded a loss of 0.91%.

A review of the historical market data can spark interesting conversations.

It’s not unusual to spot patterns from time to time, but what has happened in the past does not necessarily foreshadow what will come to pass. There is no guaranteed outcome. In the end, market fundamentals or unexpected events can easily override any trends we spot in the data.

Upward Movement

As the month unfolded, many of the catalysts that spurred new highs for the S&P 500 Index and the Nasdaq Composite this year remained in place. Fueled by growing expectations of a September rate cut, the Dow surged to its first all-time high of 2025.

Before we move ahead, let’s review the key catalysts that have underpinned stocks.

• The AI story remains intact
• Longer-term bond yields have remained relatively stable, especially regarding the benchmark 10-year Treasury bond yield
• The Fed appears to be gearing up for a September rate cut
• Corporate profits are rising—second quarter S&P 500 earnings are up an impressive 13% versus one year ago, according to LSEG
• The economy continues to expand
• Many of the larger firms seem to have weathered the initial shock of the early April tariff announcement—so-called Liberation Day, though how tariffs will eventually be integrated and absorbed is unclear.

We tend to avoid getting overly granular regarding a one-day response by investors, but the conversation has broader implications.

Specifically, let’s look at one event that led to an 846-point advance for the Dow and a record close of 45,632 on Friday, August 22. On the morning of the 22nd, Fed Chief Jerome Powell, in prepared remarks that lasted about 20 minutes, noted that “the shifting balance of risks may warrant adjusting our policy stance.”

It was the signal investors had been waiting for. Why? Let’s translate Powell’s comments into modern-day English. In essence, Powell’s remarks signaled that policymakers are actively considering a rate cut in September because they are cautiously eyeing the slowdown in job growth.

Sure, inflation hasn’t returned to the Fed’s 2% target, and progress has stalled over the past year. But with job growth slowing, the Fed is treading carefully, aiming to avoid curbing inflation at the expense of the labor market.

Whether it’s a one-and-done cut in September (assuming the Fed moves this month) or policymakers tweak the rate again later in the year (there are three meetings left this year, including September) is unknown, but all eyes are on the labor market, which could play a key role in shaping the Fed’s next steps.

Separately, as the three-day Labor Day weekend began, the U.S. Courts of Appeals for the federal circuit ruled that most of the president’s tariffs exceeded his authority, but they will remain in place pending an appeal; the ruling largely upheld a decision that was rendered in May. Now the case will be brought to the Supreme Court, and ultimately, much of the president’s trade policy may be decided by the nine justices that make up the Court.

Mark on the Charts

It began to look like the market might rollover in July, but August proved everyone wrong…again. As I said last month, this market reminds me line the old Timex watch commercials. The S&P 500 Equal Weighted Index continues to show strength. As the summer winds down now that Labor Days have passed, and the Federal Reserve is indicating that an interest rate cut may be on the horizon, market participants are hopeful that more upside will be in store for the remainder of the year.

September and October have long been viewed as challenging months for the stock market due to seasonal patterns. Since 1928, September has been the worst performing month for the S&P 500. 

October, while sometimes associated with major crashes (like 1929, 1987, and 2008), often marks the end of downturns and the start of recoveries, still carries volatility risks.

Timely Tax Tidbits

Thinking of Your Children or Grandchildren’s Education? The “One Big Beautiful Bill” Reboots 529 College Savings Plans

Last month, we provided an overview of the key provisions in the recently signed One Big Beautiful Bill Act (OBBBA).

As we kick off the new school year, we believe this is a good time to address some of the important changes that were included in the OBBBA for 529 college savings plans—changes that could significantly affect how families plan and save for education.

First, let’s define the two main types of 529 plans.

1. While less popular, prepaid tuition plans allow you to purchase college credits from participating schools for future use. You buy these credits at today’s rates. When your child is ready to attend college, the plan allows you to use the credits, even if tuition has risen.

2. What is a 529 College Savings Plan? The 529 plan, which we will focus on, is another vehicle that is used to save for education. While there is no federal deduction when you contribute to a 529 plan, capital gains, dividends, and interest are not taxed if they remain within the 529 account. Most states with income taxes allow either a deduction from income or a state tax credit for contributions into a 529 plan.

The funds in a 529 savings plan can be invested in stocks, bonds, mutual funds, exchange-traded funds (ETFs), money markets, and more. If you use the funds for qualified education expenses, you won’t pay taxes on withdrawals.

Currently, college savings accounts hold about $500 billion, according to the College Savings Plan Network. Despite the large amount of funds stashed in these accounts, not many people utilize them.

Just over two-thirds of parents save money for their children’s education in traditional checking or savings accounts, according to a Vanguard survey of 1,005 parents who have children who are 17 and under living at home.

Only 10% of parents are leveraging the value of 529 savings plans for educational expenses their children are likely to encounter, the survey found. Among millennial parents, the number drops to 8%, while just 6% of Gen Z parents take advantage of 529 college savings plans.

An OBBBA Reboot for 529 College Savings Plans for College, Vocational School, and K-12 Private Elementary & Secondary School

1. Previously, parents could withdraw up to $10,000 per year from a 529 Plan to cover K-12 tuition.
   With the OBBBA, K-12 qualified expenses—withdrawals that are not taxed—have been expanded to include:

• Curricular materials,
• Books or other instructional materials,
• Online educational materials,
• Tuition for tutoring or educational classes outside of the home,
• Fees for a nationally standardized achievement test, or any college admissions/entrance exam such as the ACT or SAT,
• Educational therapies for students with disabilities are provided by a licensed or accredited practitioner.

Tuition includes public, private, or religious elementary or secondary schools.
Starting January 1, 2026, the total withdrawal amount for all K-12 expenses will rise to $20,000 per year from $10,000.

2. Under previous law, credential programs were eligible for tax-free 529 withdrawals only when offered through community colleges or other eligible institutions.

The new law allows you to use 529 funds for a wider range of job training and credentialing programs as long as the student is enrolled in a recognized program.

Credential programs must include one of the following:

• Authorized by the Workforce Innovation and Opportunity Act,
• Approved by the federal or state government,
• Aligned with other approved postsecondary credential organizations, or
• A military credential.

Qualified withdrawals now include:

• Skilled trades and vocational programs, such as HVAC certification, welding, commercial driver’s license, plumbing, electrical work, cosmetology, and more,
• Professional license and certification fees, including CPA exam prep and testing fees, bar exam review and registration, and more,
• Required continuing education needed to maintain licenses or certification for nurses, social workers, teachers, real estate agents, and others, and
• Books, supplies, and equipment.

3. Previously set to expire on December 31, 2025, the provision allowing 529 plan holders to roll over funds into an ABLE (Achieving a Better Life Experience) Account for the beneficiary or a qualifying family member has now been extended indefinitely.

Although not the focus of this month’s newsletter, it’s worth noting that ABLE Accounts are a savings option that is available to individuals with disabilities who meet eligibility requirements. These accounts fall under Section 529A of the Internal Revenue Code and offer tax-advantaged benefits.

These rollovers are tax-free, offering families greater flexibility in repurposing education savings for qualified disability-related expenses.

The ABLE Act allows a person whose disability began before age 26 (expanding to 46 effective January 1, 2026) to save money in the ABLE account without affecting most federally funded benefits based on need.

Contribution Limits

Unlike IRAs, for instance, contribution limits are not as clear-cut. For starters, there is no annual federal contribution limit for 529 plans. You can contribute any amount per year, but contributions are considered gifts for tax purposes.

There are, however, lifetime limits imposed by states. These are very high and usually do not impact contributions. In Texas and Louisiana, the total contribution limit for all 529 plans for a single beneficiary is $500,000. Many states have an aggregate limit in excess of $500,000.

In 2025, the annual gift tax exclusion is $19,000 per beneficiary. A married couple can contribute up to $38,000 without triggering gift tax reporting.

There’s also a special “superfunding” rule that allows you to contribute five years’ worth at once—up to $95,000 in 2025—without gift tax implications, if no additional contributions are made for that beneficiary during the five-year period.

In summary, whether you're saving for college, vocational training, or certain credentialing programs, a 529 plan offers flexible, tax-advantaged options to help you reach your goals.

With recent updates expanding into how these funds can be used, now is a great time to review your college planning.

Through faith-based guidance, we help your review and refine your strategies, ensuring preparation for your children’s education will build lasting legacies, honor God, and secure financial peace for future generations.

We’re committed to helping you experience financial contentment and peace through a plan that’s right for you, and by aligning your investment with your Christian values. It’s about understanding how you want to live and what you want to do. Whether you want to spend time with family or volunteer to make the world a better place, we help you prepare to spend your time, talents, and resources on what matters most to you.

Implementing faith-based investing begins just like any other investment 
management process – we’re looking for great investments!

I hope you’ve found this review to be educational and helpful. Our goal is to be a guide to you as you run the race and keep the faith. 

Give, and it will be given to you; good measure, pressed down, shaken together, running over, will be put into your lap. For the measure you give will be the measure you get back.” Luke 6:38

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