Stocks Fall as Powell Gives No Hint of More Cuts: Markets Wrap

(Bloomberg) — Wall Street traders drove stocks lower as bonds pared gains, with Federal Reserve Chair Jerome Powell offering no hints on whether he might support a rate cut at the central bank’s October meeting.

Action was fairly muted in markets as Powell said the outlooks for the labor market and inflation face risks, reiterating his view that policymakers likely have a difficult road ahead as they weigh further interest-rate cuts.

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“Powell says nothing new,” noted Peter Boockvar at The Boock Report.

To David Russell at TradeStation, Powell is laying the groundwork for a tariffs boosting inflation in the fourth quarter. He’s giving policymakers room to maneuver against political pressure, while softening the message by saying the impact will be short lived.

“Powell doesn’t want to antagonize the White House but he’s not rolling over either,” Russell said. “He’s keeping his options open in case price pressures increase. Powell’s not trying to sound hawkish, but he’s trying to dodge some of the forceful demand for aggressive cuts.”

While most S&P 500 shares rose, the gauge edged lower as a gauge of megacaps underperformed. Ten-year yields slid one basis point to 4.13%. The dollar wavered. Crypto stabilized. Gold held its record. Oil climbed amid tensions between NATO and Russia.

Some policymakers are becoming more concerned about growing risks to the labor market, while others remain primarily worried about the possibility that above-target inflation could be pushed higher by tariffs and other policies.

Fed Governor Michelle Bowman said officials need to act decisively to bring down rates as the labor market weakens. Fed Bank of Atlanta President Raphael Bostic said he sees more inflation coming, echoing remarks from his Chicago counterpart Austan Goolsbee.

In economic news, US business activity expanded in September at the slowest pace in three months, while cooler demand limited the ability of companies to raise prices and offset tariffs.

Anthony Saglimbene at Ameriprise noted that since May, the 10-year Treasury yield has been on a bumpy decline, and the S&P 500 has posted strong gains over the same period.

Simply, lower rates make future corporate earnings more attractive when discounted to their present value — supporting higher equity valuations.

“Lower discount rates increase the present value of future cash flows for companies, making equities more appealing relative to fixed income alternatives, all else equal,” Saglimbene added.

Prospects of further rate cuts, surprisingly strong profit growth and enthusiasm for Big Tech companies that are capitalizing on artificial intelligence have all kept equities near their all-time highs.

The record-setting advance has pushed the S&P 500 nearly 3% above the average year-end forecast among those tracked by Bloomberg, which currently stands at 6,486. Only in 2024 and 1999 have the analyst calls lagged the market’s actual return so much around this time of the year.

“The bull market in equities is ‘alive and kicking’,” said Craig Johnson at Piper Sandler. “While we maintain our bullish outlook over the intermediate- to longer-term, we also recognize that the SPX has advanced for nearly five straight months without a material pullback.

His year-end S&P 500 price objective of 6,600 has recently been achieved, and short-term momentum has modestly eased. Johnson says he’ll review his year-end objective and look to establish a 2026 objective in the beginning of the fourth quarter.

The gauge hovered near 6,700.

Meantime, a burst of activity is powering the US IPO market toward its busiest month since the final innings of a manic 2021.

Klarna Group Plc and Netskope Inc.’s successful outings led the charge, lifting September’s US initial public offerings volume so far to $7.6 billion, excluding financial vehicles such as blank-check firms. Newly-public companies delivered a weighted-average return of 17%.

Corporate Highlights:

Micron Technology Inc.’s earnings after the bell Tuesday will shed light on whether the chipmaker’s high-flying stock has gotten ahead of itself after a nearly 40% gain in September. Nvidia Corp. assured customers that its landmark deal with OpenAI to invest $100 billion and expand AI infrastructure together won’t affect the chipmaker’s relationship with other clients. Google is introducing an artificial intelligence assistant that can offer live coaching to mobile gamers, part of a larger effort to boost engagement on its Android platform. ASM International NV cut its sales outlook for the second half of the year, citing lower-than-anticipated demand from some of the semiconductor equipment maker’s clients. Boeing Co. and Uzbekistan Airways unveiled a deal for as many as 22 of the US planemaker’s 787 Dreamliner jets, the largest-ever order in the airline’s history. The Trump administration linked Tylenol to autism and urged pregnant women to avoid the common pain medication despite the lack of widely accepted scientific evidence supporting the risk. Johnson & Johnson is withdrawing a device to treat debilitating acid reflux disease from markets outside the US, a move surgeons warned would set back the available treatment options for sufferers by more than a decade and also impact lung transplant patients. Firefly Aerospace Inc. reported second-quarter revenue that fell short of Wall Street’s expectations, as the small-rocket launcher works to ramp up the frequency of its flights and win new contracts. AutoZone Inc. reported comparable sales for the fourth quarter that beat the average analyst estimate. Investment giants KKR & Co. and Blackstone Inc. are leading a combined $17 billion investment in the natural gas industry, marking a massive push of private funds into a sector helping to quench artificial intelligence firms’ relentless thirst for energy. KKR and Canada Pension Plan Investment Board on Tuesday agreed to pay $10 billion for a 45% equity stake in Sempra’s infrastructure arm, which builds liquefied natural gas projects. L’Oréal SA, named by Giorgio Armani as a potential investor in the late Italian fashion mogul’s eponymous business, would only be interested in its profitable beauty arm, according to a person familiar with the matter. Jaguar Land Rover Automotive Plc extended its production shutdown yet again as the cyberattack that’s crippled the carmaker persists. Huawei Technologies Co. openly admits its silicon can’t match Nvidia’s in raw power and speed. So to pack the same punch, China’s national champion is counting on its traditional strengths: brute force, networking, and policy support. What Bloomberg Strategists say…

“For the year as a whole, the SPX has rallied on 57.2% of trading days. That’s actually higher than the last few years (despite the strong rallies of 2021, 2023, and 2024), though it’s slightly below the Covid year of 2020 (57.3%). There is of course time to best that win rate through the end of the year, but at this juncture it’s likely to be a struggle to best 2019’s mark of rallies on 59.5% of trading days.”

—Cameron Crise, Macro Strategist, Markets Live. For the full analysis, click here.

Some of the main moves in markets:

Stocks

The S&P 500 fell 0.3% as of 1:11 p.m. New York time The Nasdaq 100 fell 0.3% The Dow Jones Industrial Average was little changed The MSCI World Index fell 0.1% Bloomberg Magnificent 7 Total Return Index fell 0.8% The Russell 2000 Index rose 0.6% Currencies

The Bloomberg Dollar Spot Index was little changed The euro was little changed at $1.1808 The British pound was little changed at $1.3522 The Japanese yen was little changed at 147.71 per dollar Cryptocurrencies

Bitcoin fell 0.2% to $112,660.73 Ether fell 0.1% to $4,180.52 Bonds

The yield on 10-year Treasuries declined one basis point to 4.14% Germany’s 10-year yield was little changed at 2.75% Britain’s 10-year yield declined three basis points to 4.68% The yield on 2-year Treasuries was little changed at 3.59% The yield on 30-year Treasuries was little changed at 4.76% Commodities

West Texas Intermediate crude rose 1.9% to $63.47 a barrel Spot gold rose 0.9% to $3,781.23 an ounce ©2025 Bloomberg L.P.