Stocks Under Pressure Amid Valuation Concerns
Week Ending September 26, 2025
Stocks moved lower last week, buffeted by concerns about stock price valuations and the risk of a potential U.S. government shutdown.
The Standard & Poor’s 500 Index declined 0.31%, the Nasdaq Composite fell 0.65%, and the Dow Jones Industrial Average slipped 0.15%. Overseas, the MSCI EAFE Index, which tracks developed international markets, fell 0.34%. Closer to home, the S&P/TSX Composite Index gained 0.3%, lifted by energy and materials stocks despite weakness in technology.
Market Overview
Weekly Market Performance (September 22–26, 2025)
- S&P 500: −0.31%
- Nasdaq Composite: −0.65%
- Dow Jones Industrial Average: −0.15%
- MSCI EAFE (International Developed Markets): −0.34%
- S&P/TSX Composite Index (Canada): +0.30%
U.S. Markets: Three-Day Retreat
The week began with strength, as both the S&P 500 and the Russell 2000 small-cap index touched all-time intraday highs on Tuesday. However, cautious remarks from Federal Reserve Chair Jerome Powell about stock valuations and mounting political concerns over a possible government shutdown sparked a three-day selloff.
It marked the first time in six months that all three major U.S. indexes—the Dow, S&P 500, and Nasdaq—posted three consecutive days of declines.
On Friday, markets found some relief. The Personal Consumption Expenditures (PCE) Index, the Fed’s preferred measure of inflation, came in line with expectations. That reassured investors that the Fed would likely move forward with its “penciled-in” interest rate adjustments for the remainder of the year.
Canada & the TSX
The S&P/TSX Composite Index rose 0.3%, bucking U.S. weakness. Canada’s resource-heavy index benefited from strength in energy and mining, though technology names weighed on gains.
- Energy (+2.5%): Higher oil prices supported Canadian producers, adding momentum to the sector.
- Materials (+6.6%): Mining and metals advanced strongly, aided by resilient global demand.
- Financials (flat to modestly positive): Banks and insurers held steady on stable earnings outlooks.
- Industrials (slightly negative): Transport and infrastructure stocks dipped on softer guidance.
- Technology (−5.0%): Canadian tech mirrored U.S. weakness, dragging on broader performance.
The Canadian dollar posted its sharpest weekly decline since February against the U.S. dollar, which helped exporters but reflected broader currency volatility.
Economic Snapshot
A wave of economic data pointed to continued resilience in the U.S. economy:
- GDP: The final estimate of Q2 GDP came in at 3.8%, stronger than earlier reports.
- Durable Goods: Orders rebounded in August, led by a surge in aircraft sales.
- Labor Market: Weekly jobless claims fell, signaling ongoing labor market strength.
- Inflation: Core PCE inflation rose 2.9% year-over-year, matching forecasts.
These reports gave the Fed cover to maintain its cautious stance. Powell emphasized that while inflation remains a concern, labor market weakness could become a larger risk if growth slows.
Key Economic Reports: Week Ahead (September 29 – October 3, 2025)
Monday, September 29
- Pending Home Sales
- Fed Speakers: Waller, Hammack, Williams, Musalem, Bostic
Tuesday, September 30
- S&P Case-Shiller Home Price Index
- Job Openings
- Consumer Confidence
- Fed Speakers: Jefferson, Goolsbee, Logan
Wednesday, October 1
- ADP Employment Report
- Construction Spending
- ISM Manufacturing Index
- PMI (Manufacturing)
- Auto Sales
Thursday, October 2
- Weekly Jobless Claims
- Factory Orders
- Fed Balance Sheet
- Fed Speaker: Logan
Friday, October 3
- Employment Report
- ISM Services Index
- PMI (Services)
- Fed Speakers: Williams, Jefferson
Corporate Earnings: This Week
Tuesday, September 30
- Nike (NKE), Paychex (PAYX)
“Love is the master key that opens the gates of happiness.”
– Oliver Wendell Holmes
Name the three English-language three-letter words that begin and end with the letter E.
Last Week's Riddle: What item binds two people yet touches only one?
Answer: A wedding ring.
Our Qualicum Beach team having way too much fun during our QBB magazine photoshoot.
Footnotes and Sources
1. WSJ.com, September 26, 2025
2. Investing.com, September 26, 2025
3. CNBC.com, September 22, 2025
4. CNBC.com, September 23, 2025
5. CNBC.com, September 24, 2025
6. WSJ.com, September 25, 2025
7. CNBC.com, September 24, 2025
8. WSJ.com, September 25, 2025
9. CNBC.com, September 24, 2025
10. IRS.gov, August 20, 2024
11. Healthline, March 20, 2025
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