Monday, September 16, 2025: Pre-Fed Optimism
All three main U.S. equity indexes closed higher Monday, with the tech-heavy Nasdaq Composite leading the way and hitting new closing highs. The broad-based S&P 500 also hit a new closing high, and the Dow Jones Industrial Average – the last of the three to start hitting fresh peaks this year – rallied late to post modest gains.
Volatility: The Cboe Volatility Index (VIX) popped in percentage terms – rising more than 6% – but the "fear gauge" remains well within its "normal" range between 12 and 20.
Market Drivers: Latest news show higher than expected numbers from the retail sales. Traders positioned cautiously ahead of the Federal Reserve meeting beginning Tuesday.
Tuesday, September 17, 2025: Profit-Taking Before Fed
Stocks edged slightly lower on Tuesday as investors took some profits ahead of a highly-awaited Federal Reserve interest rate decision. The S&P 500 traded 0.13% lower to close at 6606.76, after hitting a fresh record earlier in the session. The Nasdaq Composite lost 0.07% to finish the session at 22,333.96. The Dow Jones Industrial Average dropped 125.55 points, or 0.27%, to close at 45,757.90.
Volatility: Key bull market leaders declined, with shares of Nvidia and Microsoft losing 1.6% and 1.2%, respectively. Palantir and Google parent Alphabet also pulled back.
Market Context: Markets were hence in an awkward limbo Tuesday. U.S. stocks declined, but only mildly as the two-day Fed meeting began.
Wednesday, September 18, 2025: Fed Rate Cut Day
The Big Event: The Federal Reserve cut the fed funds rate by 25 basis points, to a new range of 4%-4.25% and signaled two more rate cuts this year. The decision was not unanimous. Fed governor Stephen Miran preferred to cut by 50 basis points instead of 25.
Market Reaction: The bullish reaction in stocks immediately following the Fed decision faded with just 15 minutes to go before Fed Chair Jerome Powell speaks at his 2:30 p.m. ET presser on Wednesday. The S&P 500 (GSPC), which briefly turned green, fell 0.2%, while the Nasdaq Composite (IXIC) deepened losses, dropping 0.7%. The Dow Jones Industrial Average (^DJI), which had surged as much as 1%, trimmed gains to 0.7%.
Final Numbers: The Dow Jones Industrial Average (^DJI) rose 0.5%, while the S&P 500 (^GSPC) dropped 0.1% and the tech-heavy Nasdaq Composite (^IXIC) fell 0.3%.
Thursday, September 19, 2025: Record Highs Post-Fed
Historic Performance: Thursday saw major indexes climb across the spectrum as the S&P 500 index and the Nasdaq Composite set record highs after the Fed's rate cut. In addition, the small-cap Russell 2000® (RUT) posted its first record high close since late 2021, helped by thoughts that lower rates could propel smaller companies.
Closing Numbers: The Dow Jones Industrial Average added 172.85 points, or 0.37%, to close at 46,315.27, reaching a fresh record high. The S&P 500 settled up 0.49% at 6,664.36, while the Nasdaq Composite advanced 0.72% to finish at 22,631.48.
Tech Leadership: Apple led the way higher, rising 3.2%, as the company's latest iPhone went on sale around the world. Tesla shares were also up more than 2.2%.
Friday, September 19, 2025: Triple Witching Volatility
Triple Witching Event: Today is quarterly "triple witching" as contracts for stock index futures, stock index options, and stock options all expire. Investors are bracing for $6.5 trillion of notional US options expiring on Friday, potentially creating significant volatility.
Expected Market Impact: This could lead to greater activity and increased volatility, but overnight trading was quiet. The simultaneous expirations generally increases the trading volume of options, futures, and their underlying stocks, occasionally increasing the volatility of prices of related securities, particularly during the "witching hour" from 3:00-4:00 PM ET sees the most dramatic action.
Additional Catalysts: Also, Federal Reserve speakers returned to the circuit late this week, with Minneapolis Fed President Neel Kashkari saying he sees two more rate cuts this year, and US-China trade talks between President Trump and Chinese President Xi were scheduled.
Weekly Performance Summary
Wall Street is on pace to post strong weekly gains. The S&P 500 and Dow are up 1.2% and 1%, respectively, while the Nasdaq is up 2.2%. The Russell 2000 gained 2.2%, notched its seventh weekly advance.
The week was characterized by relatively controlled volatility despite the major Fed policy shift, with markets ultimately celebrating the rate cut and hitting multiple record highs by week's end.