Stocks Generally Up on Expectations of Fed Easing

September 8, 2025

Market Update

The S&P 500 index is up by +0.17% today, while the Dow is down by -0.23%. The Nasdaq 100 has seen a rise of +0.58%. September e-mini S&P futures increased by +0.18%, and e-mini Nasdaq futures jumped by +0.68%.

Market activity today reflects a more optimistic outlook following recent comments from the Federal Reserve. Notably, ten-year Treasury note yields have dipped to a five-month low of 4.05%. As the market anticipates next week’s FOMC meeting, there’s a pricing in of a 25 basis point hike and a small chance—around 10%—for a larger, 50 basis point cut. This week’s reports on the U.S. Consumer Price Index (CPI) and Producer Price Index (PPI) will be important indicators of whether the Fed might reduce interest rates to bolster the job market. Last Friday, stocks dropped after a disappointing payroll report raised concerns about lagging support for the U.S. labor market.

Trade news from China is adding to a bleak global growth outlook as August exports grew by +4.4%, falling short of expectations of +5.5%. Imports also rose but by only +1.3%, whereas +3.4% was anticipated.

This week’s market focus will be on developments in trade and tariffs. On Tuesday, the Bureau of Labor Statistics (BLS) will publish its annual benchmark revision to U.S. salary data through March. On Wednesday, the August PPI for final demand is projected to stay the same as July’s figure, increasing by +3.3% year-over-year. Excluding food and energy, it is expected to ease from +3.7% to +3.5% year-over-year. The August CPI is forecasted to rise from +2.7% in July to +2.9%, with CPI excluding food and energy expected to remain steady at +3.1% year-over-year. Initial unemployment claims are projected to decrease slightly to 234,000. On Friday, consumer sentiment from the University of Michigan is expected to dip between -0.2 and 58.0.

The market currently reflects a 13% chance of a 50 basis point cut in upcoming Fed meetings, a stark contrast to previous estimates of no chance. Following an anticipated 25 basis point cut on September 16-17, there is an 81% probability of a second 25 basis point cut at the October meeting, up from 54% earlier in the week. Overall, the market seems to be pricing in a total reduction of 76 basis points in federal funds rates by year-end.

On the tariffs front, a federal court recently ruled that President Trump overstepped his authority by imposing global tariffs without Congressional approval, yet those tariffs will remain in effect while the appeal is reviewed. The U.S. Federal Circuit Court of Appeals indicated that while the President has considerable power in a national emergency, it doesn’t expressly include imposing duties or taxes. This case might eventually reach the Supreme Court for a final decision. If the proposed tariffs take effect, they could rise from 13.3% to 15.2% by 2024, compared to pre-announcement levels of 2.3%.

Asian markets are trending upwards today, with the Euro Stoxx 50 up +0.57%, China’s Shanghai Composite increasing by +0.38%, and Japan’s Nikkei 225 rising by +1.45%.

Treasury note rates are moving slightly upward today, with December 10th T-note futures gaining +4 ticks. The ten-year yield has decreased to 4.051% due to support from last Friday’s weak U.S. unemployment report. Supply pressures from upcoming Treasury auctions this week could limit price gains as the Treasury holds $119 billion in T-note and T-bond auctions.

Fears regarding the Fed’s independence are impacting T-note prices, partly due to Stephen Milan’s intention to retain his position as a Fed governor while also working with the White House’s Economic Advisory Council.

European government bond yields are shifting, with German yields at a one-month low of 2.640% and British yields dropping to a three-week low of 4.616%. There is a minimal chance—1%—the ECB will cut rates by 25 basis points in its meeting on September 11th.

Stock Movements

The so-called magnificent seven tech stocks are driving the broader market today. Nvidia has risen over +2%, while Meta Platforms has also exceeded +2%. Alphabet gained +0.92%, and Tesla is up by +0.88%. Additionally, Microsoft and Amazon each saw increases of +0.77% and +0.73%, respectively. However, Apple is slightly down by -0.15%.

Chip stocks are notably climbing today, boosting market performance. Broadcom rose by over +4%, building on a +9% surge from last Friday, following news that S&P 500 chip stocks—alongside OpenAI—are working on creating an artificial intelligence accelerator. LAM Research saw an increase of +2% after receiving a favorable rating from Citigroup. Other notable gainers include KLA Corp, ASML Holding NV, Marvell Technology, ARM Holding, and Applied Materials, all rising by more than +1%.

Applovin shot up by over +10%, leading Nasdaq 100 gainers after being designated to replace Caesars Entertainment in the S&P 500 starting September 22nd. Robinhood Markets jumped by over +11% under similar circumstances. RAPT Therapeutics skyrocketed by more than +171% after announcing positive results from its treatment for seizures.

Forward Industries surged more than +67% following a significant cash injection and commitments for future funding. Echostar is up over +20% after a deal for its wireless spectrum with SpaceX’s StarLink for about $17 billion. Premier Inc. increased by over +8%, reportedly eyeing acquisition interest from a patient capital group. Oracle gained more than +2% after an upgrade from Morgan Stanley.

On the downside, telecommunications stocks dropped significantly after the spectrum acquisition by SpaceX. T-Mobile US fell by over -4%, leading the S&P 500 and Nasdaq 100 in losses, while AT&T and Verizon also saw declines of -3% and -2%, respectively.

Summit Therapeutics announced questioning data related to Ivonescimab for lung cancer, seeing shares drop by more than -15%. Caesars Entertainment fell by over -4% after being replaced in the S&P 500 index by Applovin. Transdigm Group saw a decline of over -1% after RBC Capital Markets downgraded its stock, while Duolingo fell by -0.69% following a new rating from Wells Fargo Securities.