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Weekly Market Recap: Stocks Hit Records as Fed Prepares to Cut Rates Thumbnail

Weekly Market Recap: Stocks Hit Records as Fed Prepares to Cut Rates

Business Insights Investment Stock Market

Market Overview

U.S. equities extended their year-to-date rally, with all three major indexes notching fresh record highs. The S&P 500 gained 1.6%, the Nasdaq surged 2.05%, and the Dow added 0.97%, while the Russell 2000 climbed 0.3% and sits just shy of its 2021 peak. Growth stocks outperformed as the Russell 1000 Growth rose 2.0%, compared with a 0.5% gain in Value. International markets also joined the advance, with the MSCI EAFE up 1.9% and MSCI EM higher by 4.0% on strength in Asia.

Sector performance was led by Technology (+3.1%), Utilities (+2.4%), and Energy (+1.6%), while Consumer Staples (-0.2%) was the lone laggard. The ongoing AI wave fueled sentiment, highlighted by Oracle’s upbeat forecast and a $300 billion deal with OpenAI that sparked a rally across related names.

In fixed income, U.S. Treasury yields eased as demand surged at government bond auctions. The 2-year closed at 3.56%, the 10-year at 4.06%, and the 30-year at 4.68%. Commodities strengthened, with WTI crude rising on geopolitical risks and gold climbing above $3,600/oz, supported by the prospect of lower rates.

 

Federal Reserve Insights & Economic Roundup

Investors are widely expecting a 0.25% Fed rate cut at this Wednesday’s FOMC meeting. Inflation data showed headline CPI rising 0.4% month-over-month, led by airfare, autos, apparel, and a 0.6% jump in groceries, the sharpest since 2022. Core inflation remained in line with expectations, keeping the Fed’s path to easing intact.

Labor market data painted a mixed picture. The four-week average of initial jobless claims ticked up to 240,500, but layoffs remain historically low. Meanwhile, payroll benchmarking revisions showed employment levels overstated by roughly 0.6%, suggesting the labor market is weaker than initially thought — but productivity growth stronger. This supports the Fed’s case for cutting rates, as softer labor conditions and sticky but manageable inflation point toward the start of a policy easing cycle.

 

The Week Ahead

  • Monday: Empire Manufacturing (Sep)
  • Tuesday: Retail Sales (Aug), Industrial Production (Aug), Business Inventories (Jul)
  • Wednesday: Housing Starts & Permits (Aug), FOMC rate decision
  • Thursday: Jobless Claims (Sep 13), Philadelphia Fed Outlook (Sep), Leading Index (Aug), TIC Flows (Jul)
  • Friday: No releases scheduled