Market Update: September 29 – October 6, 2025

Over the past week, U.S. stocks continued to show strength despite growing political and economic headwinds. The S&P 500 and Nasdaq both rose, driven by optimism in tech and AI sectors—particularly after AMD announced a major chip-supply deal with OpenAI, pushing its stock sharply higher and boosting sentiment across AI-related names.   Even so, the Dow Jones lagged, dragged down by weakness in names like Home Depot and McDonald’s. ¹ 

Global markets were mixed. Europe held mostly steady despite political turmoil in France, where the prime minister resigned abruptly, putting pressure on French shares and the euro.   In Asia, Japan’s markets soared after the opposition leader, known for pro-stimulus leanings, won a key party leadership contest. This outcome fueled expectations for more fiscal support and weighed on the yen.  

Bonds, Gold & Currencies

Bond yields moved higher across the curve, reflecting concerns about fiscal stability and expectations of further inflationary pressures. At the same time, gold rallied to new highs, benefiting from safe-haven demand and a weakening U.S. dollar.  

In the currency space, the U.S. dollar weakened against major counterparts. The euro and British pound gained ground, while the yen fell sharply amid the market’s shift toward riskier assets. The Chinese yuan also saw pressure, though it remained within a more controlled range. ² 

Economic & Policy Highlights

• Fed meeting & policy shift: The Federal Reserve met recently and cut interest rates by ¼ percentage point, lowering its target range to 4.00–4.25%.   The Fed also reiterated that it will continue reducing its holdings of Treasury and mortgage-backed securities, and remains alert to evolving risks. ³ 

• Tariffs & trade developments: U.S.–China tariffs remain a central concern. Recent actions included new U.S. tariffs on softwood timber and kitchen furniture imports (10% and 25%, respectively), to take effect on October 14, stacking upon existing tariffs.   Meanwhile, earlier reciprocal tariffs and trade truce measures continue to influence global trade flows and investor sentiment.⁴  

• Labor market & consumer sentiment: With the ongoing federal government shutdown causing delays in some official data releases, analysts turned to alternative indicators. The Chicago Fed estimates unemployment held steady at 4.3% for September.   At the same time, the U.S. services sector showed signs of weakening: ISM’s services employment index stayed below the 50 mark, signaling contraction, while its price index remained elevated.⁵

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Investor Takeaway

Markets remain resilient, with leadership coming from tech and AI sectors. The Fed’s rate cut has lifted short-term optimism, but rising bond yields and geopolitical risks temper the enthusiasm. Trade policy, data surprises from jobs and services, and central bank communication will be key to watch as we move forward.

1.  https://www.reuters.com/business/wall-street-futures-rise-investors-focus-ai-rate-cut-themes-2025-10-06 ↩︎
2.  https://www.reuters.com/world/china/global-markets-wrapup-1-2025-10-06 ↩︎
3.  https://www.federalreserve.gov/newsevents/pressreleases/monetary20250917 ↩︎
4.  https://www.reuters.com/world/us/trumps-trade-war-tariff-deadlines-key-upcoming-events-2025-10-03 ↩︎
5.  https://www.marketwatch.com/story/ism-services-index-shows-weak-job-market-in-september ↩︎