Week in Review Fed Considers Rate Adjustment
United States, 5th Sep 2025–The Week on Wall Street- U.S. stock markets ended last week on a mixed note, despite a strong Friday rally driven by comments from Federal Reserve Chair Jerome Powell, who hinted at the possibility of adjusting short-term interest rates at the upcoming September meeting.
For the week, the S&P 500 gained 0.27%, while the Nasdaq Composite slipped 0.58%. The Dow Jones Industrial Average saw the strongest performance, climbing 1.53%. Overseas, the MSCI EAFE Index, which tracks developed international markets, rose 0.80%.¹ ²
Powell’s Comments Spark a Turnaround
Early in the week, stocks traded cautiously as investors waited for fresh economic reports and insight from Fed officials gathering at their annual symposium in Jackson Hole, Wyoming.
A lift came Tuesday after a major retailer released positive earnings and upbeat guidance, giving markets a temporary boost. However, the rally was short-lived as weakness in large-cap tech and semiconductor stocks dragged both the Nasdaq and broader indexes lower later in the day.³
Midweek, markets reacted to the release of minutes from the Fed’s July meeting, which showed that most Federal Open Market Committee (FOMC) members were still more focused on battling inflation than on employment concerns. This fueled some investor caution.⁴
On Friday, sentiment shifted sharply. Powell’s remarks suggested that the Fed may be open to adjusting rates in September, sending stocks higher. The rally was strong enough to erase the week’s losses for the S&P 500 and nearly did the same for the Nasdaq, while firmly cementing the Dow’s weekly gains.⁵
Sector Rotation in Focus
Investors appeared to be rotating away from large-cap technology stocks, with some questioning whether valuations in this sector, especially those tied to the recent AI-driven rally, could be sustained.
Two signs supported this shift:
- The S&P 500 outperformed the more tech-heavy Nasdaq.
- The Russell 2000 Index, which tracks small-cap stocks, surged 3.25%, beating all three major indexes.⁶
Interestingly, the Fed’s focus also appeared to rotate. While July meeting minutes showed inflation was the central concern, Powell’s Jackson Hole speech highlighted a growing focus on the health of the labor market.⁷
Looking Ahead: Key Economic Reports
This week will bring a series of important economic updates and Fed commentary:
- Monday: New Home Sales data; speeches by Dallas Fed President Lorie Logan and New York Fed President John Williams.
- Tuesday: Durable Goods Orders, Case-Shiller Home Price Index, Treasury Buyback Announcement, and Consumer Confidence report.
- Wednesday: Survey of Business Uncertainty; remarks by Richmond Fed President Thomas Barkin.
- Thursday: Second estimate of Gross Domestic Product (GDP), weekly Jobless Claims, Pending Home Sales, Corporate Profits, and an update on the Fed’s Balance Sheet.
- Friday: Personal Consumption Expenditures (PCE) Index, International Trade Balance in Goods, Retail and Wholesale Inventories, and Consumer Sentiment survey.
The markets remain highly sensitive to any signs of a shift in Fed policy, and Powell’s recent comments have only added to the anticipation surrounding the September meeting. With a packed week of economic data ahead, investors will be closely watching for clues about the future path of interest rates and the overall direction of the economy.
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This content is for general information purposes only, and should not be consider as professional, financial, or legal advice.
Sources: Investors Business Daily, Econoday Economic Calendar (August 22, 2025).
Note: Forecasts are based on assumptions and subject to change as new data emerges.
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