Weekly Economic Update – 09/29/2025

The Week on Wall Street

Stocks fell last week, buffeted by concerns about stock price valuations and a possible government shutdown.

The Standard & Poor’s 500 Index declined 0.31 percent, while the Nasdaq Composite Index lost 0.65 percent. The Dow Jones Industrial Average slipped 0.15 percent. The MSCI EAFE Index, which tracks developed overseas stock markets, fell 0.34 percent.^1,2

Stocks Under Pressure

The S&P 500 and the small-cap index Russell 2000 hit all-time intraday highs on Tuesday before trending lower. The decline turned into a three-day retreat for stocks.³

Adding to the selling pressure was Federal Reserve Chair Powell, who made cautious comments on stock price valuations on Tuesday. Investors were also watching a possible government shutdown as Congressional budget deliberations appeared to stall.^4,5

It was the first time in six months that all three averages (Dow, S&P 500, and Nasdaq) declined over three consecutive sessions.⁶

Stocks rebounded Friday after the Personal Consumption & Expenditures (PCE) Index—the Fed’s preferred inflation measure—was in line with expectations. The news appeared to reassure investors that the Fed would move ahead with its “penciled-in” rate adjustments for the remainder of this year.⁷

Economic Snapshot

A flurry of updated economic data hit last week. Here are the key takeaways:

Overall, the indicators suggested a strong economy. The final estimate of Q2 gross domestic product was 3.8 percent, stronger than previous reports. Durable goods orders rebounded in August, driven by a surge in aircraft orders. And weekly jobless claims fell.⁸

The fact that the PCE was in line with estimates—core inflation of 2.9 percent year over year—was welcomed news for investors. The report seemed to support Fed Chair Powell’s position, who on Tuesday suggested that weakness in the labor market outweighed concerns about stubborn inflation.⁹

Weekly Riddle

Name the three English-language three-letter words that begin and end with the letter E.

Last Week’s Riddle: What item binds two people yet touches only one?

Answer: A wedding ring.

John Dombroski Jr. may be reached at (480) 991-1055 or [email protected]
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Posted on September 30, 2025