Stocks in Overdrive, Mood Stays Neutral

September 11th 2025

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“Market Week in Review” is a weekly market update produced by Russell Investments, offering global investment insights in a short video format. We hope you enjoy.

Key Takeaways

• North American stocks set new records
• Fed governor’s removal sparks legal battle
• U.S. unemployment rate in focus

On this week’s edition of Market Week in Review, Senior Investment Strategist and Head of Canadian Strategy, BeiChen Lin, explained key factors fueling the strong performance in North American stock markets. He also assessed the latest U.S. Federal Reserve (Fed) developments and shared upcoming watchpoints for the U.S. and Canadian labor markets. 

Records on Repeat

The final week of August was another banner week for stocks, with both the TSX index in Canada and the S&P 500 in the United States setting new record highs. The reasons for the strong performance, however, varied among the two countries, Lin said.

He explained that in the U.S., solid macroeconomic data—like the upward revision to second-quarter GDP—was a key driver. “U.S. growth was actually stronger than first reported, coming in at 3.3% year-over-year. In addition, some of the underlying components of GDP, including personal consumption expenditures, were also quite strong,” Lin remarked.

He said that in Canada, the market rally was largely powered by better-than-expected corporate earnings. “Unlike the U.S., the Canadian economy is in a much weaker spot, with growth potentially contracting last quarter. But recent earnings reports from several large Canadian banks suggest businesses have been able to withstand some of these challenges,” Lin explained.

He noted many Canadian companies earn a big chunk of their revenue from outside of Canada, which could explain why earnings haven’t taken a hit. Year-over-year earnings growth for the TSX is tracking around 8%, which is in line with longer-term averages.

Lin said despite the latest round of stock market records, Russell Investments’ proprietary measure of investor attitudes shows sentiment remaining near neutral. “This suggests markets could possibly climb even higher in the weeks ahead,” he said. 

Hitting the Court

Shifting to central banks, Lin noted U.S. President Donald Trump recently announced he is removing Fed Governor Lisa Cook from her position. “Governor Cook has indicated through her lawyers that she will contest the termination. The situation remains fluid, given this is the first time in the Fed’s history that a governor could be terminated. It’s hard to predict what the courts will ultimately decide,” he remarked, noting markets have shown little reaction to the news so far.

Lin added that with the U.S. still likely headed for a soft landing, he expects the Fed to cut rates by 0.25% next month. 

Under Scrutiny

Lin finished by noting both the U.S. and Canadian employment reports will be published next week. In the U.S., markets will be paying close attention to the unemployment rate and the breadth of job concentration, he said.

“While we expect America to dodge a recession, that doesn’t necessarily mean the unemployment rate won’t edge up slightly. We’ll be watching this carefully and also looking to see whether job gains are spread among different sectors or concentrated in a select few,” Lin commented.

He said job creation has been much more volatile in Canada, with some months even reporting net losses. “We’ll be looking to see what the August numbers show. Either way, with an unemployment rate near 7%, we expect the Bank of Canada to resume cutting rates next month,” Lin concluded. 

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Source: Russel Investments