Stocks React to Powell’s Comments, Potential Shutdown:
Markets declined last week amid concerns over stock price valuations and a possible government shutdown.
The S&P 500 Index declined 0.31%, while the Nasdaq Composite Index lost 0.65%. The Dow Jones Industrial Average slipped 0.15%. The MSCI EAFE Index, which tracks developed overseas stock markets, fell 0.34%.1,2
Source: Bloomberg Finance, L.P. (Performance data normalized 9/19/25 = 0)
Stocks Under Pressure
The S&P 500 and the small-cap index Russell 2000 hit all-time intraday highs on Tuesday before trending lower. The decline turned into a three-day retreat for stocks.3
Adding to the selling pressure was Federal Reserve Chair Powell, who made cautious comments on stock price valuations on Tuesday. Investors were also watching a possible government shutdown as Congressional budget deliberations appeared to stall.4,5
It was the first time in six months that all three averages (Dow, S&P 500, and Nasdaq) declined over three consecutive sessions.6
Stocks rebounded Friday after the Personal Consumption & Expenditures (PCE) Index—the Fed’s preferred inflation measure—was in line with expectations. The news appeared to reassure investors that the Fed would move ahead with its “penciled-in” rate adjustments for the remainder of this year.7
Sources: U.S. Department of the Treasury, Board of Governors of the Federal Reserve System, Charles Schwab
Economic Snapshot
A flurry of updated economic data hit last week. Here are the key takeaways:
Overall, the indicators suggested a strong economy. The final estimate of Q2 gross domestic product was 3.8 %, stronger than previous reports. Durable goods orders rebounded in August, driven by a surge in aircraft orders. And weekly jobless claims fell.8
The fact that the PCE was in line with estimates—core inflation of 2.9 % year over year—was welcomed news for investors. The report seemed to support Fed Chair Powell’s position, who on Tuesday suggested that weakness in the labor market outweighed concerns about stubborn inflation.9
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 26, 2025
2Investing.com, September 26, 2025
3CNBC.com, September 22, 2025
4CNBC.com, September 23, 2025
5CNBC.com, September 24, 2025
6WSJ.com, September 25, 2025
7CNBC.com, September 24, 2025
8WSJ.com, September 25, 2025
9CNBC.com, September 24, 2025
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