Wall Street Rebound: Fed Relief, Tariff Twists & Tech Surprises (NYSE Highlights Sept 26

Key Facts

Stocks Bounce Back: U.S. markets ended the week on a positive note. The Dow Jones rose +0.7%, S&P 500 +0.6%, and Nasdaq +0.4% on Friday, Sept. 26 ^[1] ^[2], reversing a mid-week slide. However, all three major indices still logged modest weekly losses after a three-day downturn earlier in the week ^[3].
Inflation Data Eases Fears: August’s core PCE inflation (the Fed’s preferred gauge) rose a tame 0.2% (2.9% year-over-year) – exactly in line with expectations ^[4]. This “no-surprise” inflation report reassured investors that price pressures are not reaccelerating, reinforcing hopes the Fed can continue easing without reigniting inflation.
Fed Signals Support: The Federal Reserve cut interest rates last week for the first time since December, and officials hinted two more rate cuts could arrive by year-end ^[5] ^[6]. Fed Chair Jerome Powell cited a cooling labor market as rationale, and swap markets still price in about 40 basis points of further cuts in 2025 ^[7] ^[8]. Traders cheered the prospect of easier monetary policy, though Fed speakers urged caution pending incoming data.
Trump’s Tariff Bombshells: President Donald Trump unveiled new tariffs targeting heavy trucks, pharmaceuticals, furniture and more ^[9]. A 25% levy on imported big rigs sent U.S. truck-maker Paccar stock surging ~5% as its largely domestic production gives it an edge ^[10] ^[11]. Meanwhile, drugmakers like Eli Lilly (+1.4%) shrugged off a proposed 100% tariff on branded drug imports thanks to exemptions for U.S.-made products ^[12] ^[13].
Big Stock Movers: Electronic Arts (EA) rocketed +14.9% after reports the video game publisher is in advanced talks to go private ^[14] – one of the day’s biggest gainers. Costco fell nearly –3% despite posting solid earnings, as analysts questioned how long its growth can be sustained ^[15] ^[16]. Elsewhere, Oracle and other AI-centric tech names stumbled mid-week on valuation jitters, before stabilizing Friday.
Market Breadth Improves: The late-week rally was broad-based. Over 2 stocks rose for every 1 that fell on the NYSE Friday ^[17], a sharp reversal from earlier in the week when decliners dominated during the pullback ^[18]. Small-cap stocks outpaced large caps (Russell 2000 +1% Friday ^[19]), and 10-year Treasury yields held near ~4.18% ^[20] as the bond market reacted calmly to the data.
Economic & Political Crosswinds: Investors navigated a mix of strong economic data and potential political hurdles. Q2 GDP was revised up to +3.8% and jobless claims fell, signaling economic resilience ^[21]. At the same time, a looming government shutdown (if Congress can’t pass funding by Sept. 30) threatened to inject uncertainty and delay economic reports ^[22]. So far, these risks have not derailed optimism.
Expert Optimism into Year-End: Many analysts see room for the rally to run. BMO Capital raised its S&P 500 year-end 2025 target to 7,000 (from 6,700) citing Fed rate cuts, solid earnings, and an “AI-fueled Goldilocks” backdrop ^[23] ^[24]. Market strategists note the bull market’s breadth is improving and expect stocks to “push higher into year-end”, barring any major surprises ^[25] ^[26].

Market Recap & Broad Trends

Flags and tickers on the NYSE trading floor in New York City, reflecting a week of shifting market sentiment. U.S. stocks rallied into the weekend after overcoming mid-week losses ^[27] ^[28].

Wall Street finished the week with a relief rally, snapping a multi-session losing streak. On Friday, Sept. 26, the Dow Jones Industrial Average jumped about 300 points (+0.7%) to 46,247, the S&P 500 gained +0.6% to 6,644, and the Nasdaq Composite rose +0.4% to 22,484 ^[29]. This rebound followed three straight down sessions through Thursday, which had left the major indexes in the red for the week. Thanks to Friday’s climb, the weekly losses were pared to around –0.2% to –0.7% ^[30] – ending a three-week run of gains but preserving most of the market’s recent upside momentum.

Notably, the rally broadened out beyond the mega-cap tech darlings. Smaller domestic companies outperformed, with the Russell 2000 small-cap index up +1% on Friday ^[31]. Market breadth was solid: advancing issues outnumbered decliners by a 2.25-to-1 ratio on the NYSE (and 1.7-to-1 on the Nasdaq) by the close ^[32]. In contrast, earlier in the week the sell-off had been widespread – on Thursday, decliners overwhelmed advancers by over 3-to-1 and 10 of 11 S&P sectors fell ^[33] ^[34]. The fear index (VIX) ticked higher during the mid-week slump, but eased back to the mid-teens as stocks stabilized ^[35].

Trading volumes told a similar tale of two halves: Thursday’s downturn saw heavy volume (~19.6 billion shares) as some investors rushed to reduce risk ^[36]. By Friday, volume ebbed to about 17.0 billion shares, slightly below the recent average ^[37] – suggesting cautious optimism, with fewer sellers and some buyers stepping back in ahead of the weekend. Meanwhile, market internals showed improvement. The NYSE recorded 205 new 52-week highs on Friday (vs 53 lows) ^[38], a much stronger showing than earlier in the week when new lows had ballooned amid the pullback ^[39]. All told, the late-week comeback and broad participation gave the market a “healthier” tone ^[40] ^[41], alleviating concerns that the rally was too narrow or fragile.

Fed Moves, Inflation Data & Economic Signals

A major catalyst for the week’s turnaround was reassuring inflation news and the prospect of further Fed rate cuts. On Friday morning, the Commerce Department reported that core Personal Consumption Expenditures (PCE) – the Fed’s preferred inflation metric – rose just +0.2% in August (vs +0.3% in July), keeping the annual core inflation rate at 2.9% ^[42]. Headline PCE came in at +0.3% (2.7% year-on-year), exactly matching forecasts ^[43]. In other words, inflation is trending sideways at a modest level – still a bit above the Fed’s 2% goal, but not flaring up anew. “Despite another month of elevated inflation, today’s PCE report was in-line across the board,” noted eToro analyst Bret Kenwell, adding that this gives confidence the “status quo will remain intact” and the Fed can stay on track with planned rate cuts ^[44].

This encouraging inflation report arrived just one week after the Federal Reserve’s first interest rate cut in over six months. At its mid-September meeting, the Fed trimmed its benchmark rate by 0.25%, citing a cooling labor market and the need to sustain economic growth ^[45]. Policymakers also signaled two more quarter-point cuts could follow before year-end, conditional on data ^[46] ^[47]. Fed Chair Jerome Powell emphasized that “inflation may not be reversing, but it’s not reaccelerating”, and pointed to signs of a softer job market as justification for easing ^[48]. The central bank, however, maintained a cautious tone – officials like Chicago Fed President Austan Goolsbee stressed they “should not rush” into the next cut with inflation still above target ^[49].

For markets, monetary policy is paramount, and investors welcomed the Fed’s dovish tilt. Swap contracts and futures continue to price in roughly 0.40% of additional Fed rate reductions by the end of 2025 ^[50] ^[51], reflecting expectations that borrowing costs will slowly come down. In the near term, bets of another immediate cut in October moderated slightly (from ~92% to 83% odds) after some robust economic readings ^[52]. Indeed, fresh data out this week highlighted the economy’s resilience: weekly jobless claims fell to their lowest since early summer at 218,000 ^[53] ^[54], and the final Q2 GDP growth was revised up to 3.8% – a surprisingly strong rebound after a contraction in Q1 ^[55] ^[56]. Consumer spending also rose more than expected in August, underscoring that households remain a pillar of support. While this strength is a positive sign for corporate earnings, it presents a mixed picture for the Fed – rapid growth could complicate aggressive rate cuts if inflation doesn’t cool further ^[57] ^[58].

Overall, the mood on Wall Street is that the Fed has regained some breathing room to support the expansion. The in-line inflation data “calms some of those worries” about renewed price spikes, as TradeStation’s David Russell put it ^[59]. Bond markets were relatively calm on the news – the 10-year Treasury yield held around 4.18% (up just 1 basis point) and 2-year yields ticked down to ~3.64% ^[60], indicating little alarm about inflation or Fed policy veering off course. With longer-term yields stabilizing, rate-sensitive sectors like housing and utilities found some footing. Still, eyes are on upcoming data: next week’s September jobs report is highly anticipated as a gauge for the Fed’s late-October meeting ^[61]. For now, “no news is good news” on inflation ^[62], and that has given both stocks and the Fed a sigh of relief heading into quarter-end.

Trade Policy & Geopolitical Factors

Surprising developments on the trade and political front added volatility, though they ultimately didn’t upend the market’s rally. Mid-week, President Donald Trump startled investors by announcing a suite of new import tariffs spanning heavy machinery, drugs, and consumer goods. The administration unveiled a 25% tariff on heavy-duty truck imports, plus steep duties on other goods from pharmaceuticals to kitchen cabinets ^[63]. These moves, aimed at bolstering domestic industries and addressing trade imbalances, initially injected uncertainty – affected sectors swung sharply as traders digested who might win or lose.

In particular, U.S. industrial and manufacturing stocks got a boost on hopes of gaining an edge over foreign competitors. Shares of Paccar Inc., a leading American truck maker, climbed 5.2% on Friday ^[64] after the tariff news, as analysts noted Paccar builds most of its trucks in the U.S. and would face less import competition ^[65]. Likewise, domestic-focused pharmaceutical companies outperformed – President Trump’s proposal of a 100% tariff on imported branded drugs was largely shrugged off by the market ^[66]. Investors wagered that big U.S. drugmakers (like Eli Lilly, which rose +1.4% ^[67]) won’t be hurt thanks to exemptions for firms with U.S. manufacturing ^[68]. In other words, the tariffs could end up penalizing foreign producers while sparing U.S. firms, at least in these categories.

On the other hand, industries dependent on global supply chains saw some jitters. Retailers and consumer goods companies that rely on imported inputs faced pressure as higher costs and potential supply disruptions were factored in ^[69] ^[70]. However, the market’s overall reaction was muted; the equity rebound “was not derailed” by trade headlines ^[71]. Traders seem to view trade policy as a wild card that can swing sentiment in the short run, but so far no broad trade war has materialized to seriously threaten the economic outlook. The tariffs announced were relatively targeted, and crucially, China’s response (or that of other trading partners) remains to be seen – no immediate retaliation was reported, which helped calm nerves.

Beyond trade, Washington’s budget showdown loomed in the background. With a new fiscal year days away, Congress was still wrangling over spending bills as of Sept. 27, raising the specter of a U.S. government shutdown starting October 1. Such a shutdown would furlough federal workers and delay key economic reports. Market participants warily noted that a prolonged budget impasse could add uncertainty and even skew Fed decision-making if official data releases (like jobs and inflation figures) are postponed ^[72]. Thus far, however, the mere threat of a shutdown has had limited financial market impact – Treasury yields and the dollar have not moved dramatically on it, and equity investors appear to be betting on either a last-minute funding resolution or a short-lived shutdown with minimal economic damage. Still, it’s a headline to watch, as political brinkmanship in D.C. could spark volatility if it escalates.

Geopolitically, there were no major new shocks directly hitting markets during this two-day span. Ongoing international issues – from war in Eastern Europe to tensions in the Middle East – continued in the backdrop, but without new escalations that might drive oil or safe-haven flows. In fact, energy prices have been trending lower, providing a tailwind for the inflation outlook. U.S. crude oil (WTI) hovered around $65.30 per barrel ^[73] after a modest +0.5% uptick on Friday – a relatively subdued level that reflects ample global supplies and perhaps some demand moderation. Cheaper oil has been good news for consumers and helped keep headline inflation in check. Meanwhile, gold prices remain historically high at about $3,766 an ounce ^[74] (up 0.4% on Friday), indicative of some investors still seeking safety hedges. The elevated gold price – roughly double where it stood a couple years ago – suggests that longer-term uncertainties (be it geopolitics, inflation, or currency concerns) are still on some minds, even as stock markets climb.

Major Corporate News & Stock Movers

Several major companies made headlines between Sept. 26–27, driving notable stock moves and giving insight into broader market themes. Here are some of the top corporate developments:

Electronic Arts (EA): The video-game publisher’s stock soared ~15% after reports emerged that EA is in advanced talks to be taken private by a private equity group ^[75]. The prospect of a massive buyout – which would rank as one of the year’s biggest deals – ignited speculation across the gaming industry. EA’s surge boosted sentiment for tech and media shares, and signaled that M&A activity could pick up in areas like interactive entertainment.
Paccar Inc.: The maker of Peterbilt and Kenworth trucks jumped +5.2% Friday, buoyed by Trump’s heavy-truck tariff plan ^[76]. Analysts noted Paccar’s significant U.S. manufacturing base means the 25% import tariff on foreign trucks shields it from overseas competition ^[77]. This tariff tailwind made Paccar one of the S&P 500’s top gainers and lifted other domestic industrial stocks in its wake.
Pharma Giants: Shares of major U.S. drugmakers like Eli Lilly (LLY) and Merck logged solid gains (around +1–2%) as investors digested the proposed 100% tariff on imported drugs. Because many blockbuster medications are produced domestically or under exemption clauses, the market appeared to view the tariff as more bark than bite for Big Pharma ^[78]. In fact, some U.S. pharmaceutical firms could see reduced foreign competition, a potential silver lining that helped their stocks this week.
Costco Wholesale (COST): The warehouse retail leader beat earnings estimates for its fiscal fourth quarter, benefiting from bargain-hunting consumers and a 14% jump in membership fee income ^[79] ^[80]. Despite this good news, Costco’s stock fell –2.9% on Friday ^[81]. The dip came after an initial post-earnings pop fizzled, as analysts raised questions about whether Costco can maintain its growth pace and margins going forward ^[82]. Some pointed to slightly soft same-store sales and cautioned that higher tariffs or a shaky consumer could pose headwinds. In short, even strong retailers aren’t immune to market skepticism in the current environment.
Oracle (ORCL) and AI Stocks: Earlier in the week, enterprise tech stocks were a weak spot. Oracle shares slid over –5% on Thursday – part of a 16% drop from recent highs – amid concerns over the sustainability of the AI boom ^[83]. After years of explosive gains (many AI-exposed stocks had more than tripled in three years), investors grew nervous about record-high valuations and the path to monetization for huge AI investments ^[84]. Tesla (TSLA) also fell about –4.4% that day ^[85]. However, by Friday these tech names stabilized, and the NASDAQ’s tech-heavy indices bounced back. News that Nvidia may invest $100 billion in OpenAI helped reinvigorate the AI hype, sparking fresh inflows into U.S. equity funds earlier in the week ^[86] ^[87]. The takeaway: the AI rally that fueled much of 2025’s market gains hit a speed bump, but optimism around transformative tech remains a driving force for investors.
Starbucks (SBUX): In corporate leadership news, Starbucks announced that its Chief Technology Officer Deb Hall Lefevre resigned this week amid a major tech-oriented “Back to Starbucks” turnaround plan ^[88] ^[89]. The coffee giant is aggressively rolling out new technology – from AI-powered inventory tracking to automated ordering systems – in an effort to boost efficiency and revive sales after six quarters of decline ^[90] ^[91]. An internal memo noted the CTO’s departure would not derail these tech initiatives. Starbucks also said it will close some underperforming stores (reducing its store count ~1%) and is cutting 900 corporate jobs as part of restructuring ^[92]. The stock reaction was muted, but the news underscores how even traditional retail brands are embracing AI and automation as critical to their comeback strategies.
Boeing (BA): Aerospace manufacturer Boeing saw positive developments on two fronts. First, it reached an agreement with the union representing striking workers in its defense division to resume labor negotiations under a federal mediator, aiming to end an 8-week strike that had slowed its military production ^[93]. Second, U.S. regulators agreed to restore more self-certification authority to Boeing’s engineers for final safety inspections on certain 737 MAX and 787 jets ^[94]. This marks an easing of the extra oversight imposed after Boeing’s past quality lapses, and should help streamline deliveries. These bits of good news helped Boeing’s stock and the broader aerospace sector end the week on a stronger note, with hopes that Boeing can avoid further disruptions and delays in its pipeline.

Other notable tidbits included Uber projecting faster-than-anticipated growth in its grocery delivery arm ^[95] (as it races to catch Instacart and Amazon in that space), and PG&E (California’s utility) being upgraded back to investment grade by Fitch after legislative moves to bolster wildfire insurance funds ^[96]. In the crypto realm, Bitcoin quietly hovered near $109,000 – having breached the six-figure milestone – and Ether around $4,000 ^[97], reflecting strong risk appetite extending even into digital assets. While these did not directly sway the stock market, they paint a picture of a generally risk-on environment across asset classes as September winds down.

Expert Insights & Market Outlook

Facing this mix of encouraging data and lingering risks, Wall Street analysts and economists weighed in with their interpretations – and most struck an optimistic tone about the market’s trajectory. Here are some key insights from experts:

Bullish Forecasts: Perhaps most boldly, BMO Capital Markets raised its S&P 500 target for end of 2025 to 7,000 (roughly +5% upside from current levels) ^[98]. BMO’s chief strategist Brian Belski argued that Fed rate cuts, improving earnings, and an “AI renaissance” are rejuvenating investor confidence. “With the Fed cutting interest rates, earnings solidifying, AI not anywhere near bubble territory and stock market performance broadening out, the believability and comfortability of US stocks is back in full swing,” Belski wrote, even suggesting that 2025 could echo the mid-1990s ‘Goldilocks’ era of robust growth and benign inflation ^[99].
Fed Will Stay on Track: Many market watchers echoed the view that the latest data validate the Fed’s current path. “Today’s data reinforces yesterday’s ‘gee-the-economy-is-stronger-than-anyone-thought’ narrative, but at the same time, there’s less to worry about on the inflation front,” observed Chris Low of FHN Financial, pointing to the combo of solid spending and tempered prices. Morgan Stanley’s Ellen Zentner noted that “barring a major upside surprise from next week’s jobs report, the Fed should remain on course to deliver another rate cut in late October.” ^[100] In other words, as long as employment and inflation metrics don’t suddenly spike, the Fed is expected to continue providing stimulus – a positive backdrop for equities.
Consumers Keep the Engine Running: A recurring theme was the resilience of the American consumer, even amid higher rates. “Actions speak louder than words and consumers continue to spend, which is why corporate profits continue to exceed expectations,” said Chris Zaccarelli of Northlight Asset Management ^[101]. As long as people are employed and buying goods, “the bull market is going to continue,” he noted, since companies can adapt and thrive with steady demand ^[102]. Several analysts highlighted that strong retail sales and corporate earnings (as seen in results from Costco, etc.) indicate the economy isn’t cracking under higher interest rates just yet ^[103] ^[104].
Broadening Market Leadership: Another encouraging sign cited was the broadening of market leadership beyond just Big Tech. “The latest data clears the path for stocks to push higher into year-end,” said Bloomberg’s macro strategist Tatiana Darie, noting that consumers taking headwinds “in stride” is allowing a wider array of stocks to rally ^[105]. Strategists pointed out that small-caps, industrials, and financials have been joining the party ^[106], which makes the overall market advance more sustainable. The fact that U.S. equity funds just saw over $12 billion of inflows – breaking a streak of outflows – is one sign that investor appetite for risk is returning alongside this broadening rally ^[107] ^[108]. Notably, the biggest chunk of new money went into large-cap funds (especially tech/AI plays), but even industrial sector funds saw significant inflows ^[109], reflecting renewed enthusiasm for cyclical and value stocks.
Cautions and “Wild Cards”: Despite the optimism, experts do caution against complacency. The consensus is that the Fed’s course depends on data, and any unexpected spike in inflation or drop in employment could pause the easing cycle. Additionally, “trade policy remains a wildcard capable of shifting sentiment quickly,” one analyst noted ^[110] – a reminder that further tariff escalations or geopolitical flare-ups (e.g. in oil-producing regions) could sour the mood. Some investors are also hedging their bets: robust flows into bond and money-market funds (over $11–26 billion into each, alongside equity inflows ^[111]) show that plenty of cash is still being parked cautiously. As one market newsletter summarized, many participants are “participating in the rally but preparing for turbulence” ^[112].

Looking ahead, the short-term outlook appears guardedly positive. The combination of peaking interest rates, cooling inflation, and resilient growth is often a sweet spot for stocks. As long as upcoming data (jobs, CPI, etc.) confirm these trends, analysts expect a supportive environment for equities into the fourth quarter. Key things to watch next week include any progress (or setbacks) on avoiding a government shutdown, the tone of corporate guidance as companies prepare to report Q3 earnings, and the reaction of bond yields to the latest figures ^[113]. For now, Wall Street seems to be entering the final stretch of 2025 in a “glass half full” mindset – encouraged by a Goldilocks-like mix of growth and inflation, but still alert to any potential spoilsport events on the horizon.

Sources: Reuters ^[114] ^[115] ^[116] ^[117] ^[118] ^[119] ^[120] ^[121] ^[122] ^[123], Bloomberg/Swissinfo ^[124] ^[125] ^[126] ^[127] ^[128], Nasdaq/Zacks ^[129] ^[130], STL News ^[131] ^[132] ^[133], and others.