Fed Cuts Short-Term Rates:
Stocks posted solid gains last week, propelled by the Fed’s decision to finally cut short-term interest rates.
The S&P 500 Index rose 1.22%, while the Nasdaq Composite Index climbed 2.21%. The Dow Jones Industrial Average advanced 1.05%. By contrast, the MSCI EAFE Index, which tracks developed overseas stock markets, fell 0.27%.1,2
Source: Bloomberg Finance, L.P. (Performance data normalized 9/12/25 = 0)
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. The news helped push the S&P 500 to close above 6600 for the first time.3
After the Fed announced on Wednesday that it was cutting short-term interest rates by a quarter percentage point, all three major averages fell before rising again in a choppy, mixed trading session.4,5
After digesting the Fed decision, all three major averages posted solid gains on Thursday, paced by tech names. But small caps stole the day’s headlines, with the Russell 2000 Index gaining more than 2% and hitting an intraday record high. Smaller companies tend to disproportionately benefit when the Fed lowers interest rates, given their greater reliance on outside funding than larger companies.6
The post-cut momentum continued into Friday; this was the second consecutive week of gains for the Dow Industrials, and the third straight week for the Nasdaq and S&P 500.7
Sources: U.S. Department of the Treasury, Board of Governors of the Federal Reserve System, Charles Schwab
Following the Fed
The Federal Reserve decision brought the Federal Funds Rate down to a 4-4.25% target range—its lowest level in three years.
While widely anticipated, the real news about the cut was in the finer points made by Fed Chair Jerome Powell in the post-meeting press conference. He said the move was essentially a “risk management” cut. This concept confused investors a bit, resulting in scattered markets.
Powell also said two more rate adjustments are “penciled in” for this year. He suggested another rate change could occur in 2026, followed by another in 2027.8
This Week: Key Economic Data
Source: Bloomberg Finance L.P.
This Week: Companies Reporting Earnings
Source: EarningsWhispers
Author
Gary Aiken
Chief Investment Officer
Concord Asset Management
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Footnotes and Sources
1WSJ.com, September 19, 2025
2Investing.com, September 19, 2025
3CNBC.com, September 15, 2025
4WSJ.com, September 16, 2025
5WSJ.com, September 17, 2025
6CNBC.com, September 18, 2025
7CNBC.com, September 19, 2025
8CNBC.com, September 17, 2025
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