Market Recap - Tuesday, September 16, 2025
Stocks Drift Lower Ahead of Fed Decision
Stocks finished modestly lower today as markets took a breather ahead of Wednesday’s key Fed decision. The S&P 500 slipped 0.13%, the Nasdaq eased 0.07%, and the Dow fell 0.27%, while the Russell 2000 declined 0.09%. These minor losses came after recent all-time highs for the S&P and Nasdaq.
Big tech was mixed — Tesla rallied, while Nvidia slipped on lukewarm demand reports for its China chip. Weakness hit banks, insurers, hospitals, homebuilders, airlines, and casual dining stocks. On the other hand, energy stocks, semiconductors, China tech, department stores, and railroad names outperformed. Bond yields dipped slightly, and the dollar had its worst day since late August. Crude oil rose 1.9%, gold ticked up 0.2%, and Bitcoin climbed 1.3%.
Markets largely shrugged off hotter-than-expected retail sales and import price data. August retail sales rose 0.6%, beating expectations, with strong growth in online and food service categories. Import prices also ticked up, but these data points didn’t move the needle on expectations for a 25 bp Fed rate cut on Wednesday — already fully priced in. Investors remain focused on the Fed’s tone, new economic projections, and Powell’s press conference.
Despite signs of a still-resilient consumer, the recent rise in jobless claims and softening labor market data have markets betting on as many as 150 bps of cuts over the next year. Political headlines, including a stopgap funding bill to avoid a government shutdown and a Trump court ruling, were mostly ignored. Meanwhile, corporate news included a potential Disney-Webtoon deal, big moves in energy and AI infrastructure stocks, and a sharp drop in Dave & Buster’s after weak earnings.
Here’s Our Take
The market is in wait-and-see mode. While today’s stronger retail sales suggest consumers are still spending, the Fed is expected to look through this data in favor of a broader trend of labor market cooling. With a rate cut fully baked in, the real story will be what the Fed signals about future cuts and how Powell frames the economic outlook. A dovish tone could keep the rally alive, especially in tech and rate-sensitive names. But with so much good news already priced in, there’s a growing risk of a “sell-the-news” reaction, especially if Powell sounds cautious or the dot plot disappoints.
Overall, this remains a bullish backdrop driven by rate cut optimism and AI excitement, but investors are becoming more selective. Mixed earnings reactions and warnings from some companies show that execution still matters. We’re also heading into a seasonally choppier period, with corporate buybacks paused and Fed policy in focus. All eyes now turn to tomorrow’s FOMC outcome to determine the next market move.
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