Market Recap - Tuesday, September 9, 2025
New Highs Amid Labor Market Revisions and Inflation Jitters
US stocks climbed again today, with the Dow (+0.43%), S&P 500 (+0.27%), and Nasdaq (+0.37%) all closing at fresh record highs, despite narrow leadership and weak breadth. The Russell 2000 lagged, dipping 0.55%. After a choppy session, a strong final-hour rally pushed the major indices into positive territory. Gains were led by big tech names like Alphabet (GOOGL) and Meta (META), while Apple (AAPL) slipped slightly following its product event.
Health insurers, banks, telecoms, refiners, and China tech also outperformed. On the other hand, media, homebuilders, machinery, and lithium-related stocks sold off. Most-shorted names and small caps were weak, signaling a cautious tone under the surface. Treasuries saw yields rise slightly after a multi-day slide, and oil climbed 0.7% on geopolitical headlines out of the Middle East.
There was plenty of news to digest. The labor market remained in focus after the Bureau of Labor Statistics revised payroll figures lower by 911,000 jobs, confirming a broader slowdown that had already been widely expected. This added to expectations for Fed rate cuts later this year, although those expectations had already been priced in by markets.
Meanwhile, inflation data due out Wednesday and Thursday could inject fresh volatility, but many believe the Fed’s current focus on the softening labor market may limit the market impact of slightly hotter prints. Sell-side conferences continued to support sentiment, with upbeat outlooks from AI-related and consumer-facing companies. Middle East tensions and stronger crude prices added another layer of complexity.
Here's Our Take:
Today’s rally looked strong on the surface with new record closes, but underneath the hood, market breadth remains a concern - most stocks didn’t participate. Still, the overall setup for stocks remains favorable: a weakening labor market is boosting expectations for rate cuts, while earnings guidance and sell-side conference commentary suggest companies are managing well despite macro uncertainty. However, upcoming inflation data could shift the tone quickly if it surprises to the upside, especially with energy and import-sensitive categories like apparel showing signs of pricing pressure. With the Fed in blackout ahead of next week’s meeting, investors will have to navigate the next few days without any central bank guidance. For now, the bullish narrative of “soft landing + rate cuts” is intact - but cracks are worth watching.
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