The following is an excerpt from Zacks Chief Strategist John Blank’s full Sep Market Strategy report To access the full PDF, click here.

A. Intro: How to update the NBER’s way. Building up to a U.S. recession outlook.

One chart (shown below) contains the four main U.S. macroeconomic indicators used by the National Bureau of Economic Research (NBER) to date U.S. business cycle peaks and troughs.

Image Source: St Louis Federal Reserve

If a stock or bond investor wants to verify the status of the U.S. economy in one chart, this would be the one.

Of the four indicators, two U.S. macro indicators may have peaked, a few months back, perhaps around early April 2025:

• Real Business Sales (the light green line) – may have peaked. 
• Real Personal Income Less Transfer Payments (the topmost blue line), a core measure of income earned from actual economic activity, may be near a peak too.

The other two U.S. macro indicators?

Non-farm Payrolls (the purple line) continues a decelerating upward advance.
Industrial Production (the red line) is flat, for three years now.

I would add to this NBER chart trend observation:

There was obvious flattening, across multiple months -- of all four key U.S. macro variables-- before the U.S. economy entered the prior 2008 recession.

B. Zacks September 2025 Sector/Industry/Company Telescope

August 29th, 2025 earnings estimates data showed a growth/cyclical Zacks Industry Ranking.

The rankings delivered 3 Very Attractive Sectors: Industrials, Info Tech, & Financials.

Info Tech earnings growth remains well-supported by “AI” data/cloud centers and strong tech mega-cap earnings. 

One sector was Attractive: Communication Services 

Consumer Staples fell to an Unattractive rating. Health Care stayed Unattractive.

Materials fell a long way, to a Very Unattractive rating.

Consumer Discretionary and Energy sectors held onto Very Unattractive ratings.

(1) Industrials stayed at a Very Attractive rating. Metal Fabricating, Business Products, Industrial Products-Services, and Aerospace & Defense looked strong. 

Zacks #1 Rank (STRONG BUY): Century Aluminum (CENX Quick QuoteCENX - Free Report)

(2) Info Tech rose to a Very Attractive rating from Attractive. Electronics and Semis led.

Zacks #2 Rank (BUY): Nvidia (NVDA Quick QuoteNVDA - Free Report)

(3) Financials rose to a Very Attractive rating from Attractive. Investment Banks & Brokers, Major Banks, and Banks & Thrifts looked best.

Zacks #1 Rank (STRONG BUY): Interactive Brokers (IBKR Quick QuoteIBKR - Free Report)

(4) Communications Services stayed Attractive. Telco Equipment was best.

(5) Utilities fell to Unattractive from Very Attractive. Utility-Electric Power was best.

(6) Consumer Staples fell to Unattractive from Attractive. Soaps & Cosmetics, and Agri-business stayed strong.

(7) Health Care stayed Unattractive. Medical Products were best, at market perform.

(8) Materials fell to Very Unattractive from Attractive. Metals-non-Ferrous and Containers & Glass stayed OK. 

(9) Consumer Discretionary stayed at Very Unattractive. Publishing looked good.

(10) Energy rose to Unattractive from Very Unattractive. Oil and Gas E&P looked best.

C. Conclusion

It will NOT be a simple case of quarterly earnings & revenue “beats” that propel stocks. 

No doubt, the outlook for Fed Funds rate cuts is a factor motivating stocks. 

Also keep the overall money supply in mind, provided by $6.7T in Fed assets, and other sources of foreign central bank liquidity. 

September 2025 bullish traders look ahead years, not months. 

These traders look to all of 2026. And all of 2027. 

To euphorically see broad bullish fundamentals.

As to weak trader hands? 

They incorporate looming soft Q3-25 quarterly EPS reports, and project upsetting Q4-25 and Q1-26 outlooks.

Do worry about this: 9 of 16 Zacks sectors show zero, or negative EPS growth in Q3-25.

That is notable.

Enjoy the rest of my Zacks SEPT 2025 Market Strategy report.

Warm Regards,

John Blank, PhD.
Zacks Chief Equity Strategist and Economist