Weekly Wrap

The stock market ended the week on a strong note, driven by renewed clarity on monetary policy following Wednesday’s FOMC decision. As widely expected, the Fed cut the target range for the federal funds rate by 25 basis points to 4.00–4.25%, leaving markets focused on updated guidance for further easing. Officials remain split on the pace of additional cuts this year: nine project one more, ten forecast two, and one anticipates none. Following the announcement, CME FedWatch probabilities for a 25-basis point cut in October rose to 91.9%, with a December cut now at 80.6%.

Mega-cap leadership continued to drive broad market gains, with the S&P 500 (+1.2%), Nasdaq Composite (+2.2%), and DJIA (+1.1%) capturing fresh record intraday and closing highs. The Russell 2000 (+2.2%) was a standout, eclipsing its prior intraday record from November 2024 and its record closing high from November 2021, reflecting strong small-cap appetite amid supportive policy expectations. The S&P MidCap 400 (+0.1%) advanced more modestly. The Vanguard Mega Cap Growth ETF finished with a 1.1% gain, while the S&P 500 Equal Weight Index (+0.1%)  lagged the market-weighted S&P 500.

Sector performance was led by communication services (+3.4%) and information technology (+2.1%) sectors, fueled by gains in Alphabet (GOOG +4.0% WTD) and Apple (AAPL +3.6% WTD). The consumer discretionary sector (+1.5%) also captured a nice gain. In contrast, consumer staples (-1.3%), real estate (-1.4%),  and materials (-0.9%)  sectors lagged.

Economic data released this week offered a mixed backdrop. Retail Sales for August (+0.6%; Briefing.com consensus: +0.3%) and Industrial Production for August (+0.1%; Briefing.com consensus: 0.0%) pointed to continued consumer and manufacturing activity, while Housing Starts for August (-8.5%; Briefing.com consensus: 1.375M) and Building Permits for August (-3.7%; Briefing.com consensus: 1.312M) reflected affordability pressures. Initial Jobless Claims for the week ending September 13 declined to 231,000 (Briefing.com consensus: 245,000), and the Philadelphia Fed Index for September surged to 23.2 (Briefing.com consensus: 3.0), signaling stronger regional manufacturing growth.

Overall, the week was defined by record highs for large and small caps, broad outperformance in mega-cap tech, and market optimism for further Fed easing. The Russell 2000’s strong performance highlighted continued risk appetite, whil macro data provided context for the Fed’s guidance and the pace of future rate adjustments.

• Nasdaq Composite: +2.2% WTD
• Russell 2000 +2.2% WTD
• S&P 500: +1.2% WTD
• DJIA: +1.1% WTD
• S&P Mid Cap 400: +0.1% WTD

Monday:

The stock market kicked off the week with index-level gains that saw the S&P 500 (+0.5%) and Nasdaq Composite (+0.9%) secure new all-time intraday and closing highs, while the DJIA (+0.1%) lagged. Gains were largely concentrated in a select group of mega-cap leaders, which continued to flex their influence over index performance.

Shares of Tesla (TSLA 410.04, +14.10, +3.56%) surged early after it was reported that CEO Elon Musk purchased around 2.6 million shares of stock worth nearly $1 billion on Friday, his first open market purchase of the stock since February 2020. Though the stock finished well off its session highs, it still added substantial gains to its impressive September run and helped the consumer discretionary sector (+1.1%) finish among the best-performing S&P 500 sectors.

The communication services sector (+2.3%) comfortably outpaced all other sectors today as Alphabet (GOOG 251.76, +10.38, +4.30%) hit fresh records, becoming just the fourth U.S. company to surpass $3 trillion in market value.

With additional solid showings from Amazon (AMZN 231.43, +3.28, +1.44%), Meta Platforms (META 764.70, +9.11, +1.21%), and Microsoft (MSFT 515.36, +5.46, +1.07%), the Vanguard Mega Cap Growth ETF advanced 0.9% today. 

The information technology sector (+0.8%) traded flattish out of the gate, nursing a loss in NVIDIA (NVDA 177.75, -0.07, -0.04%), which traded lower following reports that China found the company to be in violation of its anti-monopoly law. The company issued a statement in response reaffirming their compliance with the law "in all respects," and the stock finished near its flatline. 

Elsewhere in the sector, Seagate Tech (STX 211.12, +15.13, +7.72%) and Western Digital (WDC 102.39, +4.73, +4.84%) furthered their strong recent runs as HDD prices continue to increase due to tight supply and strong demand for large-capacity drives fueled by AI-driven storage requirements.

The industrials (+0.5%) and utilities (+0.2%) sectors round out the five S&P 500 sectors that advanced today. 

Of the six sectors that finished lower, only the consumer staples (-1.2%), health care (-1.0%), and materials (-0.8%) finished with losses wider than 0.5%.

While today's action resulted in decent index level gains, the advance was dependent on the strong performances of several mega-cap names. The S&P 500 Equal Weighted Index (-0.2%) finished with a loss today, markedly underperforming the market-weighted S&P 500 (+0.5%). 

Today's gains came on lighter-than-average volume, reflecting a cautious tone as investors await this week's FOMC meeting for clarity on the policy path ahead.

With a 25-basis point rate cut already fully priced in, homebuilder stocks retreated in what looked like an early "sell-the-news" move, leaving the iShares U.S. Home Construction ETF down 1.3%.

Meanwhile, smaller-cap names delivered a mixed showing after their recent strength on firming rate cut expectations, with the Russell 2000 closing with a 0.3% gain while the S&P MidCap 400 slipped 0.1%.

On the trade front, the U.S. and China reached a framework agreement to transition TikTok to U.S. ownership, with a scheduled call between President Trump and Chinese President Xi Jinping on Friday to finalize discussions.

U.S. Treasuries began the week with gains across the curve. The 2-year note yield settled down three basis points to 3.53%, and the 10-year note yield settled down three basis points to 4.03%. 

Reviewing today's data:

• The Empire State Manufacturing survey fell to -8.7 in September (Briefing.com consensus 3.0) from 11.9 in August.

Tuesday:

After a brief opening jump saw the S&P 500 (-0.1%) and Nasdaq Composite (-0.1%) establish new record highs, the major averages traded slightly lower for the bulk of today's session, finishing just beneath their flatlines.

The S&P 500 captured a new all-time high this morning at 6,626.99, while the Nasdaq Composite followed a similar trajectory, setting a new all-time high of 22,397.50. Meanwhile, the DJIA (-0.3%) lagged the group.

The stock market's meandering disposition reflected a lack of conviction ahead of tomorrow's FOMC decision. With a 25-basis point rate cut fully priced in, the move itself is unlikely to sway markets, though investors will be closely watching the updated Summary of Economic Projections and Fed Chair Powell's press conference for signals on whether additional cuts in October and December remain on the table.

This morning the market learned that Stephen Miran will have a voting seat at the meeting after the Senate confirmed his Fed Governor nomination yesterday evening. Separately, a federal appeals court ruled that Fed Governor Lisa Cook cannot be fired ahead of the meeting, though neither one of these developments is expected to affect the outcome of this week's meeting.

Current rate cut expectations held steady today despite a trove of economic data, which featured a promising Retail Sales report for August (0.6%; Briefing.com consensus: 0.3%).

As a result, the market moved sideways, with the major averages staying close to their opening levels.

Four S&P 500 sectors finished higher, while six finished lower, and the health care sector finished flat. 

The energy sector (+1.7%) led the advancers, supported by crude oil futures settling today's session $1.24 higher (+2.0%) at $64.56 per barrel.

The consumer discretionary sector (+0.8%) was the only other sector to finish with a gain wider than 0.5%. Tesla (TSLA 421.62, +11.58, +2.82%) and Amazon (AMZN 234.05, +2.62, +1.13%) contributed to the advance amid a mixed day of mega-cap performance that saw the Vanguard Mega Cap Growth ETF close with a 0.1% loss. 

Elsewhere, the consumer staples (+0.2%) and communication services sectors (+0.3%) finished with more modest gains.

Besides a 1.8% loss in the thinly traded utilities sector, losses were also relatively modest across the board. 

Slim breadth figures further indicated the market's "wait and see" disposition today ahead of tomorrow's Fed developments. Decliners outpaced advancers by a roughly 5-to-4 margin on the NYSE and held an advantage of just a few dozen names on the Nasdaq.

While today's corporate headlines were not particularly market-moving, there were still several noteworthy developments. Hims & Hers Health (HIMS 50.86, -3.10, -5.74%) moved lower after receiving a warning letter from the FDA regarding the company's claims concerning its semaglutide products. 

Warner Bros. Discovery (WBD 18.25, -1.21, -6.22%) ceded some of its recent gains after TD Cowen downgraded the stock to Hold from Buy, citing concerns if the proposed acquisition by Paramount Skydance (PSKY 17.53, -1.05, -5.65%) does not come to fruition, according to CNBC.

Oracle (ORCL 306.65, +4.51, +1.49%) captured another nice gain after reports that the company will keep its cloud deal with TikTok under the proposed agreement to bring it under U.S. control. The White House extended the delay of the TikTok ban to December 18, with a call between President Trump and Chinese President Xi set to finalize the deal on Friday. 

U.S. Treasuries saw range-bound trading in front of Wednesday's FOMC decision, as buyers and sellers held their fire for the most part. The 2-year note yield settled down two basis points to 3.51%, and the 10-year note yield settled unchanged at 4.03%.

Reviewing today's data: 

• August Retail Sales 0.6% (Briefing.com consensus 0.3%); Prior was revised to 0.6% from 0.5%, August Retail Sales ex-auto 0.7% (Briefing.com consensus 0.3%); Prior was revised to 0.4% from 0.3%
  
  • The key takeaway from the report is that it reflects a consumer still spending at a good clip. The retail sales data are not adjusted for price changes. Granted, higher prices accounted for some of the increased sales activity in August, but they didn't account for all of it.
• August Import Prices 0.3%; Prior was revised to 0.2% from 0.4%
• August Import Prices ex-oil 0.4%; Prior was revised to 0.0% from 0.3%
• August Export Prices 0.3%; Prior was revised to 0.3% from 0.1%
• August Export Prices ex-ag. 0.3%; Prior was revised to 0.3% from 0.1%
• August Industrial Production 0.1% (Briefing.com consensus 0.0%); Prior was revised to -0.4% from -0.1%, August Capacity Utilization 77.4% (Briefing.com consensus 77.4%); Prior was revised to 77.4% from 77.5%
  
  • The key takeaway from the report is that industrial production activity was driven in August by the production of motor vehicles and parts.
• July Business Inventories 0.2% (Briefing.com consensus 0.2%); Prior was revised to 0.2% from 0.0%
• September NAHB Housing Market Index 32 (Briefing.com consensus 33); Prior 32

Wednesday:

The stock market saw mixed action today leading up to and in response to the FOMC's decision to cut the Fed funds rate target range by 25 basis points, with mega-cap weakness stifling index-level growth despite broader strength. 

If someone had taken a glance at the market just after the open and then logged off until the close, they would assume that an uneventful session had taken place, as the major averages finished similar to how they started.

Barring a pocket of increased volatility that followed the FOMC announcement, that assumption would be largely correct. The initial spike in reaction to the announcement, however, sent the DJIA (+0.6%) to a new all-time high level of 46,261.95 and brought the S&P 500 (-0.1%) within three points of its own record high. Even the Nasdaq Composite (-0.3%) climbed back to its flatline before a sharp sell-off sent the major averages to session lows.

While today's decision brought about a short period of volatility, the 25-basis point cut had been fully priced in for some time. Market participants were arguably more eager to see how the results of the FOMC meeting would shape expectations for further easing. 

Officials remain split on the number of additional cuts this year, with nine of the 19 participants projecting just one more, ten favoring two, and one signaling no further cuts at all.

Despite differing opinions on the number of rate cuts the market will receive this year, today's meeting still increased the probability of their happening.

The CME FedWatch tool now assigns an 89.9% probability of at least a 25-basis point rate cut at the October 29 FOMC meeting, up from 78.2% yesterday. Similarly, the odds of an even further rate cut of at least 25 basis points at the December 10 meeting now stand at 83.9%, up from 72.8% yesterday.

While rate cut expectations through the end of the year at least temporarily solidified, sentiments have shifted about further easing in 2026. The 2026 median projection sees only one rate cut in 2026 versus the three rate cuts that had been priced into the Fed funds futures market.

Ultimately, the market took all of these developments in stride, shaking off the afternoon volatility and finishing in a familiar mixed fashion.

The information technology (-0.7%), industrials (-0.5%), consumer discretionary (-0.3%), communication services (-0.1%), and real estate (-0.1%) sectors finished lower, with mega-cap names coming under pressure for the duration of the day. NVIDIA (NVDA 170.29, -4.59, -2.62%) had a particularly rough session as the Financial Times reported the Chinese government has asked domestic companies to stop purchasing NVIDIA's products.

The Vanguard Mega Cap Growth ETF finished with a 0.4% loss, and the S&P 500 Equal Weighted Index (+0.1%) outperformed the market-weighted S&P 500 (-0.1%), though by a substantially slimmer margin than earlier levels. 

Smaller-cap names outside of the S&P 500 also saw some of their strength eroded following the FOMC announcement, as the Russell 2000 (+0.2%) and S&P Mid Cap 400 (-0.2%) both finished well beneath session highs that saw the indices hold earlier gains that exceeded 1.0%. 

Elsewhere, the financials (+1.0%) and consumer staples (+0.9%) were the top beneficiaries of today's action, while four other sectors closed with more modest gains. 

Separately, StubHub Holdings (STUB 22.00, -1.50, -6.38%) drew solid interest, pricing at $23.50 vs. the $22-$25 expected range and opening for trading with an 8% gain at $25.35, before finishing the day on a lackluster note beneath its offering price. 

While the Fed confirmed more easing is on the horizon, the pace beyond this year remains in doubt, ensuring monetary policy will stay a central driver of market action into year-end.

U.S. Treasuries endured some midweek volatility surrounding the expected FOMC rate cut announcement before ending the session at their lowest levels of the day. The 2-year note yield settled up four basis points to 3.55%, and the 10-year note yield settled up five basis points to 4.08%. 

Reviewing today's data:

• Total housing starts declined 8.5% month-over-month in August to a seasonally adjusted annual rate of 1.307 million (Briefing.com consensus: 1.375 million) from a revised 1.429 million (from 1.428 million) in July. Building permits declined 3.7% month-over-month to a seasonally adjusted annual rate of 1.312 million (Briefing.com consensus: 1.370 million) from an unrevised 1.362 million in July.
  • The key takeaway from the report is the weakness in single-unit starts (-7.0% month-over-month) and single-unit permits (-2.2%), which is a reflection of affordability constraints for builders and prospective homeowners alike. Strikingly, single-unit starts in the South—the nation's largest homebuilding region—plunged 17.0% in August.
• The weekly MBA Mortgage Index jumped 29.7% to follow last week's 9.2% increase. The Refinance Index spiked 57.7% while the Purchase Index was up 2.9%.

Thursday:

The stock market's first full session after yesterday's FOMC meeting saw the S&P 500 (+0.5%), Nasdaq Composite (+1.0%), and DJIA (+0.3%) capture record intraday and closing highs on relatively broad strength and big tech outperformance.

Perhaps even more notably, optimism around further policy easing from the Fed also propelled the Russell 2000 (+2.5%) past its record intraday high from November 2024 and its record closing high from November 2021. The S&P Mid Cap 400 (+1.3%) also notched a healthy gain.

Market participants were presumably enthused by heightened probabilities of additional rate cuts in October and December. According to the CME FedWatch Tool, the probability of a 25 basis point cut to 3.75-4.00% at the October FOMC meeting is 91.9%, versus 78.2% shortly before yesterday's announcement, while the probability of another 25 basis point cut to 3.50-3.75% at the December FOMC meeting is 82.3%, versus 72.8% shortly before yesterday's announcement.

Mega-cap tech helped pace the broader advance after rebounding from yesterday's drag on index-level performance. NVIDIA (NVDA 176.24, +5.95, +3.49%) reclaimed its 50-day moving average (175.28), while Intel (INTC 32.07, +7.17, +28.79%) surged after announcing that NVIDIA will take a $5 billion equity stake in the company as part of a multi-year collaboration to co-develop custom data center and PC products.

The PHLX Semiconductor Index ended the day with a 3.6% gain, while the broader information technology sector (+1.3%) finished as the top-performing S&P 500 sector. 

The industrials sector (+1.1%) also outperformed, while five other sectors finished with more modest gains.

Sector performance fluctuated through the session, but losses were limited, with only the consumer staples (-1.0%) and consumer discretionary (-0.5%) sectors finishing with losses of 0.5% or wider.

Broader market strength saw the S&P 500 Equal Weighted Index (+0.7%) outperform the market-weighted S&P 500 (+0.5%), though mega-cap names still contributed to today's advance, with the Vanguard Mega Cap Growth ETF closing with a 0.5% gain. 

Advancers outpaced decliners by a nearly 2-to-1 ratio on the NYSE and a roughly 8-to-3 clip on the Nasdaq. 

Companies that reported earnings this morning were among the names in decline, with Darden Restaurants (DRI 192.74, -16.05, -7.69%) and Cracker Barrel's (CBRL 45.80, -3.79, -7.64%) earnings misses weighing on other fast casual dining names, while FactSet (FDS 301.05, -34.99, -10.41%) dragged down its peer S&P Global (SPGI 507.84, -36.26, -6.67%) with a miss of its own. 

U.S. Treasuries followed yesterday's post-FOMC retreat with a modestly higher start that faced resistance immediately after the open with solid economic data contributing to the early selling. Weekly Initial Claims dropped from their highest level since mid-2023, while the Philadelphia Fed Survey (23.2; Briefing.com consensus 3.0) showed an acceleration in manufacturing activity. 

The 2-year note yield settled up two basis points to 3.57%, and the 10-year note yield settled up three basis points to 4.10%. 

• Nasdaq Composite: +16.4% YTD
• S&P 500: +12.8% YTD
• Russell 2000: +10.7% YTD
• DJIA: +8.5% YTD
• S&P Mid Cap 400: +6.0% YTD

Reviewing today's data:

• Initial jobless claims for the week ending September 13 decreased by 33,000 to 231,000 (Briefing.com consensus: 245,000) following an upwardly revised 264,000 (from 263,000) in the prior week. Continuing jobless claims for the week ending September 6 decreased by 7,000 to 1.920 million.
  • The key takeaway from the report is that initial claims settled back from what appeared to be an aberrantly high level in the prior week, returning to an area that is more consistent with a job market where layoff activity is relatively low.
• The Philadelphia Fed Index surged to 23.2 for September (Briefing.com consensus: 3.0) from -0.3 in August, with the new orders index climbing to 12.4 from -1.9 and the prices paid index dropping to 46.8 from 66.8. The dividing line between expansion and contraction for this report is 0.0, so the September reading represents an acceleration in manufacturing activity in the Philadelphia Fed region.
  • The key takeaway from the report is found in the welcome combination of stronger growth and fading prices.
• Conference Board's Leading Economic Index was down 0.5% in August (Briefing.com consensus -0.1%) after a revised 0.1% increase (from -0.1%) in July.

Friday:

The stock market ended the week on a strong note, with the S&P 500 (+0.5%), Nasdaq Composite (+0.7%), and DJIA (+0.4%) all capturing fresh intraday and closing records. Gains were powered by outperformance in the mega-cap space, which masked negative breadth at the index level.

Meanwhile, smaller cap indices such as the Russell 2000 (-0.8%) and S&P Mid Cap 400 (-0.8%) gave back some of yesterday's gains.

The Vanguard Mega Cap Growth ETF gained 0.8% on the day, while the S&P 500 Equal Weighted Index (flat) underperformed the market-weighted S&P 500 (+0.5%) as decliners outpaced advancers by a roughly 2-to-1 ratio on the NYSE and a roughly 3-to-2 ratio on the Nasdaq.

Apple (AAPL 245.50, +7.62, +3.20%) remained a standout in the best-performing information technology sector (+1.2%) following the launch of its iPhone 17 lineup, with reports pointing to strong international demand and the company looking to boost production of its lower-cost model.

Oracle (ORCL 308.81, +12.19, +4.11%) reversed an early decline after President Trump described his call with Chinese President Xi as "productive," adding "appreciate the TikTok approval." U.S. and Chinese officials both described the call as productive, though a deal to bring TikTok under U.S. control has yet to be finalized.

Alphabet (GOOG 255.24, +2.91, +1.15%) and Tesla (TSLA 426.07, +9.22, +2.21%) contributed to gains in the communication services (+0.5%) and consumer discretionary (+0.3%) sectors, while the utilities (+0.7%), financials (+0.2%), industrials (+0.2%), and materials (+0.2%) sectors rounded out the seven advancing S&P 500 sectors. 

While sector strength fluctuated throughout the day, only the energy sector (-1.3%) closed with a loss wider than 0.5%.

On the earnings front, FedEx (FDX 231.89, +5.39, +2.38%) captured a nice gain after an earnings beat and upside guidance, while Lennar (LEN 127.32, -5.55, -4.18%) slipped after reporting a miss on revenue expectations. The iShares U.S. Home Construction ETF slipped 1.7% today.

Bolstered rate cut expectations that drove yesterday's push to record highs remained steady today amid a lack of economic data. With the September FOMC meeting now in the rearview, Fed officials were free to add to the policy conversation. Fed Governor Stephan Miran (FOMC voting member) told CNBC he supports five rate cuts this year, arguing growth will improve in the second half, while Minneapolis Fed President Neel Kashkari (FOMC nonvoting member) said in a Bloomberg interview that he favors two more cuts in 2025.

All told, mega-cap strength drove record-setting gains for the major averages despite negative breadth.

U.S. Treasuries ended the week with losses across the curve, deepening their post-FOMC retreat with longer tenors remaining at the forefront of the selling. The 2-year note yield settled up one basis point to 3.58% and the 10-year note yield settled up four basis points to 4.14%.

• Nasdaq Composite: +17.2% YTD
• S&P 500: +13.3% YTD
• Russell 2000: +9.8% YTD
• DJIA: +8.9% YTD
• S&P Mid Cap 400: +5.2% YTD

There was no economic data of note today.