Stocks Rally on Fed Rate Cut
Week Ending September 19, 2025
Stocks posted solid gains last week, propelled by the Federal Reserve’s decision to cut short-term interest rates.
The Standard & Poor’s 500 Index rose 1.22%, the Nasdaq Composite Index climbed 2.21%, and the Dow Jones Industrial Average advanced 1.05%. By contrast, the MSCI EAFE Index, which tracks developed overseas stock markets, slipped 0.27%. Closer to home, the S&P/TSX Composite Index gained 1.35%, supported by strength in energy and industrials.
Market Overview
Weekly Market Performance (September 15–19, 2025)
- S&P 500: +1.22%
- Nasdaq Composite: +2.21%
- Dow Jones Industrial Average: +1.05%
- MSCI EAFE (International Developed Markets): –0.27%
- S&P/TSX Composite Index (Canada): +1.35%
U.S. Markets: Third Week of Gains for S&P, Nasdaq
Stocks advanced to start the week following the president's positive comments on trade talks with China, helping the S&P 500 close above 6600 for the first time.
Markets wavered on Wednesday after the Fed announced it was cutting short-term interest rates by a quarter percentage point. While all three major indexes initially fell, they recovered in a mixed but choppy session.
By Thursday, investors digested the Fed’s move, and stocks rallied again—driven by technology names. Small caps stood out, with the Russell 2000 Index gaining more than 2% and setting an intraday record. Historically, smaller companies tend to benefit more when borrowing costs fall due to their reliance on external financing.
Momentum carried through Friday, marking the second consecutive week of gains for the Dow and the third straight week for the S&P 500 and Nasdaq.
Canada & the TSX
The S&P/TSX Composite Index advanced 1.35%, buoyed by rising oil prices and solid performance from industrials and financials.
- Energy: Crude oil prices climbed above $85 per barrel, supporting Canada’s resource-heavy index.
- Industrials: Transportation and infrastructure names advanced on improved earnings outlooks.
- Financials: Banks benefited from expectations that the Bank of Canada may follow the Fed with its own rate cut later this year.
- Gold & Materials: Precious metals softened as rate cuts supported the U.S. dollar, weighing on gold miners.
Following the Fed
The Federal Reserve lowered the Federal Funds Rate to a 4.00–4.25% target range, its lowest in three years.
While the cut was expected, Fed Chair Jerome Powell framed the move as a “risk management” cut during his post-meeting press conference. His remarks initially confused investors, though sentiment rebounded as Powell also indicated that two more cuts remain “penciled in” for this year. He further suggested a possible adjustment in 2026 and another in 2027.
Key Economic Reports: Week Ahead (September 22–26, 2025)
Monday, September 22
- Fed Officials Speak: John Williams (New York), Alberto Musalem (St. Louis), Stephen Miran (Governor), Beth Hammack (Cleveland), Tom Barkin (Richmond)
Tuesday, September 23 - PMI Composite
- Fed Officials Speak: Michelle Bowman (Vice Chair), Raphael Bostic (Atlanta), Jerome Powell (Fed Chair)
Wednesday, September 24
- New Home Sales
- Fed Official: Mary Daly (San Francisco)
Thursday, September 25
- GDP (third estimate)
- Durable Goods Orders
- Weekly Jobless Claims
- Trade Balance in Goods
- Fed Balance Sheet
- Retail & Wholesale Inventories
- Existing Home Sales
- Fed Officials Speak: Austan Goolsbee (Chicago), John Williams, Michelle Bowman, Michael Barr (Governor), Lorie Logan (Dallas), Mary Daly
Friday, September 26
- Personal Consumption Expenditures (PCE) Index
- Consumer Sentiment
- Fed Officials: Tom Barkin, Michelle Bowman
Corporate Earnings: This Week
Tuesday, September 23
- Micron Technology, Inc. (MU)
- AutoZone, Inc. (AZO)
Wednesday, September 24
- Cintas Corporation (CTAS)
Thursday, September 25
- Costco Wholesale Corporation (COST)
“The winter of the spirit must be journeyed through, and it must not only be conquered but the benefits used. Yet without it maturity cannot arrive.”
– Jane Roberts
What item binds two people yet touches only one?
Last Week's Riddle: A train moving as fast as it can go strikes a man’s hand, yet he is uninjured and the train goes off its tracks. Under what circumstances could this happen?
Answer: The train that strikes the man is a toy train running around on a model set.
Joanne's son, Matthew, at the Vancouver Aquarium.
Footnotes and Sources
1. WSJ.com, September 19, 2025
2. Investing.com, September 19, 2025
3. CNBC.com, September 15, 2025
4. WSJ.com, September 16, 2025
5. WSJ.com, September 17, 2025
6. CNBC.com, September 18, 2025
7. CNBC.com, September 19, 2025
8. CNBC.com, September 17, 2025
9. IRS.gov, December 5, 2024
10. Yoga Basics, March 20, 2025
Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost.
The forecasts or forward-looking statements are based on assumptions, may not materialize, and are subject to revision without notice.
The market indexes discussed are unmanaged, and generally, considered representative of their respective markets. Index performance is not indicative of the past performance of a particular investment. Indexes do not incur management fees, costs, and expenses. Individuals cannot directly invest in unmanaged indexes. Past performance does not guarantee future results.
The Dow Jones Industrial Average is an unmanaged index that is generally considered representative of large-capitalization companies on the U.S. stock market. The Nasdaq Composite is an index of the common stocks and similar securities listed on the Nasdaq stock market and considered a broad indicator of the performance of stocks of technology and growth companies. The MSCI EAFE Index was created by Morgan Stanley Capital International (MSCI) and serves as a benchmark of the performance of major international equity markets, as represented by 21 major MSCI indexes from Europe, Australia, and Southeast Asia. The S&P 500 Composite Index is an unmanaged group of securities that are considered to be representative of the stock market in general.
U.S. Treasury Notes are guaranteed by the federal government as to the timely payment of principal and interest. However, if you sell a Treasury Note prior to maturity, it may be worth more or less than the original price paid. Fixed income investments are subject to various risks including changes in interest rates, credit quality, inflation risk, market valuations, prepayments, corporate events, tax ramifications and other factors.
International investments carry additional risks, which include differences in financial reporting standards, currency exchange rates, political risks unique to a specific country, foreign taxes and regulations, and the potential for illiquid markets. These factors may result in greater share price volatility.
Please consult your financial professional for additional information.