The US stock market today closed the third quarter of 2025 at historic highs with the S&P 500 index breaking past 6,600 points and the Dow Jones Industrial Average hitting 46,000. Investors now await the Federal Reserve’s policy announcement, expected to deliver the first interest rate cut of the year.
Markets widely anticipate a quarter-point cut when the Federal Open Market Committee releases its decision. Bloomberg surveys indicate officials are likely to project two rate cuts this year, signaling one additional move in either October or December.
Chair Jerome Powell will hold a press conference after the announcement, whose remarks will be monitored to determine whether the pace of easing will be quick or slow. JPMorgan analysts expect a modest rally in the S&P 500 if Powell maintains a dovish tone, while others caution that a smaller-than-expected move could unsettle markets.
Economists emphasize that labor market weakness remains a central concern for policymakers. Wells Fargo’s Scott Wren noted that Powell’s remarks on consumer spending will help determine whether cuts extend beyond September.
Trading was mixed ahead of the Fed decision. As of 11:30 a.m. in New York, the S&P 500 dropped by 0.1%. The NASDAQ 100 fell 0.4%, while the Dow Jones Industrial Average rose 0.7%. The Stoxx Europe 600 was stable, the MSCI World Index declined 0.1%, and the Russell 2000 gained 1%. The Bloomberg Magnificent 7 Total Return Index slipped 1.1%.
In currencies, the Bloomberg Dollar Spot Index held steady. The euro fell 0.2% to $1.1849, the British pound rose 0.1% to $1.3662, and the Japanese yen traded at 146.35 per dollar.
Meanwhile, cryptocurrency prices softened. Bitcoin dropped 1% to $115,710.17, while Ether declined 0.3% to $4,487.75.
Bond yields were mixed. The 10-year US Treasury rose one basis point to 4.04%. Germany’s 10-year yield edged down to 2.68%, and Britain’s equivalent fell to 4.63%. The 2-year Treasury yield gained three basis points to 3.53%, while the 30-year yield slipped to 4.64%.
Commodities also eased. West Texas Intermediate crude declined 0.5% to $64.18 a barrel, and spot gold slipped 0.1% to $3,686.07 an ounce.
The recent surge indicates a positive corporate performance and optimism about artificial intelligence. NVIDIA had a 142% year-over-year increase in data center revenue, and Broadcom had record AI semiconductor sales. Several large cloud vendors, such as Microsoft, Alphabet, and Amazon, were also reporting AI-related gains.
Although there is an overall optimism, the analysts caution that high valuations may increase volatility risks. The S&P 500 price-to-earnings ratio is currently in the 93rd historical percentile, leading to comparisons with prior market bubbles.
Nevertheless, most strategists forecast that rate cuts and increased earnings will offer support through to 2026, although they warn that inflation and geopolitical risks can act as headwinds.
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