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Market Update from CIO Lan Cai, CFA – September 2026

MARKETS

  • Inflationary pressure in fuel prices coinciding with a 25 bps fed rate hike weighed down stock market performances for the month of September, especially in the Financials, Materials, and Real Estate sectors. The global equity index (MSCI ACWI IMI) decreased -1.41% in September and was up +12.97% YTD. The S&P 500, which tracks large cap U.S. stocks, decreased -0.35% in September and was up +12.75% YTD. The Russell 2000 Index, which tracks domestic small cap stocks decreased -5.25% in September and was up +13.71% YTD. The International developed equity index (MSCI EAFE) decreased -3.05% in September and was up +10.33% YTD. The emerging markets index (MSCI EM) decreased -0.56% in September and was up +23.38% YTD.

  • In September, we saw an increase in rates across the curve; the 30-year U.S. Treasury bond yield increased +39 bps to 5.64%, the 10-year yield increased +54 bps to 5.29%, and the 2-year yield increased +54 bps to 4.88%. The Bloomberg U.S. Government Credit Index, a proxy for the U.S. fixed income market, decreased -2.40% in September and was down -2.85% YTD.


ECONOMIC AND GEOPOLITICAL HEADLINES

  • According to the Bureau of Economic Analysis, the third estimate for U.S. real gross domestic product (GDP) increased in the second quarter of 2026 by +2.2%, down from the first quarter 2026 increase of +2.5%.

  • The September Services PMI was 54.9%, a decrease of -0.5% from August. The September Manufacturing PMI was 54.5%, down -0.1% from August. Per the Institute for Supply Management (ISM), a reading above 50 is considered economic expansion and below 50 is considered economic contraction.

  • As reported by the Bureau of Labor Statistics on October 2, 2026, September non-farm employment increased by 29,000 jobs, while the unemployment rate ticked up to 4.2%.  In September employment in all major industries changed little month over month, with small increases in healthcare, construction, and manufacturing. Minor decreases in financial activities employment.  Average Hourly Earnings (wages) increased by 3.0% year-over-year.


PERFORMANCE UPDATES

  • The Equity Fund decreased -1.35% in September and is up +13.19% YTD. The Bond Fund decreased -2.67% in September and is down -3.23% YTD. The Stable Value Fund increased +0.21% in September and is up +2.01% YTD. The Northern Trust World Selection Index Fund decreased -1.48% in September and is up +11.53% YTD.

  • The Sustainable Balanced Fund decreased by -2.26% in September and is up +4.54% YTD. The Target Annuitization Date TAD 2025; TAD 2030; TAD 2035; TAD 2040; TAD 2045; TAD 2050; TAD 2055; TAD 2060; and TAD 2065 returns were down -0.69%, -1.40%, -1.86%, -1.85%, -1.74, -1.65%, -1.53%, -1.52%, and -1.52% respectively for September and are up 3.15%, +3.97%, +5.36%, +6.83%, +8.13%, +9.37%, +10.53%, +10.61%, and +10.59% respectively YTD.

Note: Fund performance values are estimates.