PNC Directions Portfolio and Performance Review

1-month
(Cumulative)

1-year
(Cumulative)

3-year
(Annualized)

5-year
(Annualized)

US Equities:
Russell 3000

-0.84%

15.13%

22.26%

12.64%

International Equities:
MSCI ACWI ex USA IMI

-2.43%

19.25%

19.84%

9.16%

U.S. Fixed Income:
Bloomberg US Aggregate Bond

-2.61%

-1.84%

4.06%

-0.64%

Source: Morningstar

  • The Fed shifted back toward tighter policy. On September 16, the Fed raised the federal funds target range by 0.25 percentage point from 3.75% to 4.00%, the first increase since 2023. The Federal Open Market Committee said economic activity was expanding at a solid pace, domestic spending was resilient, and inflation remained elevated. Updated projections suggested that another increase this year was possible, but the timing remains dependent on incoming data.
  • Inflation improved, but it remains above target. The August Personal Consumption Expenditures (PCE) price index rose 0.3% for the month and 3.4% from a year ago. Core PCE, which excludes food and energy prices, rose 0.2% for the month and 3.0% from a year earlier. PCE remains the Federal Reserve’s preferred inflation gauge, and one report does not establish a durable trend.
  • Higher Treasury yields pressured bonds but improved income potential. The 10-year Treasury yield ended September near 5.24%, up roughly 0.53 percentage point during the month, while the 30-year yield finished near 5.57%. Rising yields reduced the market value of existing bonds and contributed to weak monthly fixed-income returns. Higher starting yields may increase the income available from newly purchased high-quality bonds, although these investments remain subject to interest-rate and credit risks.
  • Oil remained the month’s clearest market risk. Middle East supply disruptions and tight refining capacity kept energy markets elevated and volatile. At the September 30 close, West Texas Intermediate crude was approximately $90.40 per barrel and Brent crude approximately $103.50, representing monthly increases of about 8% and 14%. Elevated crude and refined-product costs matter because they can raise freight and production expenses, pressure household budgets, and complicate the inflation outlook.

  • U.S. Large-Cap Growth: The S&P 500 Growth Index gained 1.95% for the month, supported by earnings momentum and continued capital spending among large technology companies tied to artificial-intelligence infrastructure. The result remained concentrated in a relatively small group of firms, leaving the segment sensitive to earnings disappointments, shifts in capital-spending expectations, and higher interest rates.
  • U.S. Mid-Cap Blend: The S&P 400 MidCap Growth index declined -2.96% under tight monetary conditions and rising capital costs compressed valuations for these firms, particularly those with higher interest rate sensitivity. “Higher for longer” rates represent a key risk for this asset class in the present environment.
  • Diversified Emerging Markets: The MSCI Emerging Markets Index returned -0.56% for the month. Technology-oriented markets and semiconductor supply chains linked to artificial-intelligence investment provided support, while currency movements and trade-policy uncertainty remained important sources of volatility.

  • U.S. Mid-Cap Value: The S&P MidCap 400 Value Index returned -5.60% for the month. Higher borrowing costs and weaker performance among economically sensitive companies created a difficult backdrop for firms with greater financing needs. The result illustrates why mid-cap value can be particularly sensitive to changes in interest rates, credit conditions, and earnings expectations.
  • U.S. Small-Cap Growth: The Russell 2000 Growth Index returned -5.31% in September. Rising Treasury yields pressured valuation multiples, while smaller companies generally remained more exposed to external financing conditions than larger firms. Continued tight financial conditions could keep performance volatile, particularly for companies whose expected earnings are further in the future.
  • U.S. Small-Cap Value: The Russell 2000 Value Index returned -5.20% for the month. Higher rates, persistent inflation, and restrictive credit conditions weighed on smaller financial and industrial companies. The segment remains sensitive to the path of economic growth and credit quality, so one month’s weakness should not be treated as a durable trend.

  • No strategic allocation changes were made during September. Portfolio positioning remains balanced and diversified. Strong earnings and continued economic growth remained supportive of present allocations and investments, but elevated interest rates and uneven inflation progress still warranted caution. Diversification across regions, investment styles, and company sizes helps reduce dependence on any single market segment, although it cannot eliminate the risk of loss. Fixed income yields continue to provide income, while bond prices remain sensitive to changes in long-term interest rate fluctuations.

For questions about your account holdings or performance, please contact your PNC Wealth Management Advisor.

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