DFG Navigator Archives | September 2025

Your Capital Markets Snapshot: Labor Market Weakens, Rate Cuts in Focus

Last week was a loaded week for US labor market data, and it contained clear signs of a softening U.S. labor market. August jobs data showed only 22,000 jobs were added, well below expectations, and the unemployment rate rose to 4.3%. This weaker labor data increased expectations for Federal Reserve rate cuts, with markets expectations for a rate cut of either 25 or 50 basis points at the September meeting. Eyes will be on this week’s CPI and PPI releases, which will provide the last read on inflation going into the September meeting. Treasury yields fell sharply, supporting consumer and corporate borrowing, while the yield curve steepened, benefiting lenders. Equity markets were volatile to end the week, with the S&P 500 hitting an all-time high before pulling back following Friday’s nonfarm report. Despite the volatility, the S&P 500 and Nasdaq managed to post slightly positive weeks while the Dow Jones slipped slightly. Gold rallied to a record high, and mortgage rates saw their largest one-day drop in over a year.

Your Capital Markets Snapshot: Equity Markets Experienced Modest Declines

Last week, equity markets experienced modest declines as midweek gains were offset by a Friday sell-off ahead of the Labor Day weekend. The S&P 500 briefly reached a new all-time high Thursday before slipping back below. AI remained a dominant  market driver, with NVIDIA’s earnings drawing significant attention.  Its muted stock reaction highlighted the challenge of lofty expectations. Economic data was generally positive, including an upward revision to Q2 GDP growth and resilient consumer spending. However, inflation ticked higher, with core PCE rising to 2.9%. Expectations for a September rate cut from the Federal Reserve continue to grow. Market breadth improved across large and small cap stocks (measured by stocks trading above their 200-day moving averages), suggesting healthy underlying sentiment. Market history suggests we may experience seasonal volatility risks in September and October; however, fundamentals remain supportive so this could create opportunities to strategically rebalance across asset classes.

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