.png){kind=logo}
On Thursday, September 25th, the Dow Jones Industrial Average (DJI) fell 0.4%, and the S&P 500 (GSPC) lost approximately 0.7%. Meanwhile, the technology-heavy NASDAQ Composite (IXIC) fell nearly 0.7%. Big Tech stocks took a hit, with Oracle (ORCL) adding to its recent losses and Tesla (TSLA) slipping by 4%.
Meanwhile, US gross domestic product (GDP) increased faster than expected, rising by 3.8% annually, the fastest pace in almost two years. This upward revision in economic activity comes after a contraction in the first quarter.
The spike in equities this year, with $15 trillion of gains, has been mainly caused by optimism about the economy's resilience and the growth in corporate profits. Still, concerns about the market's overvaluation remain. With the S&P 500's price-to-earnings ratio reaching a level not seen since the dot-com bubble, investors are reluctant.
Despite this, the GDP report did not significantly change expectations about the Federal Reserve's monetary policy. Traders still expect rate cuts in 2025; however, the latest data doesn't give much of a reason for immediate changes to the Fed's path.
The Federal Reserve's attention is still on the job market, but traders are susceptible to the upcoming inflation report, due on Friday. The personal consumption expenditures (PCE) price index excluding food and energy is projected to increase by 0.2% in August, down from 0.3% in July. A report indicating even a slight upward trend may raise concerns that inflation is more stubborn than expected, which may reduce the scope for more rate cuts.
The latest numbers on initial jobless claims, which fell to the lowest level since July, imply that while the labor market is cooling, layoffs are still contained. Companies are generally holding onto their workers in light of economic uncertainties. This stability in the labor market, coupled with robust growth in the GDP, gives a picture of an economy that, even with its challenges, continues to do better than anticipated.
The initial public offering (IPO) market experienced a revival, and companies that went public in 2025 performed better than broader benchmarks. The weighted average performance of new IPOs has increased by 41%, outpacing the S&P 500 and NASDAQ 100.
Huge deals have been successful, with IPOs that raise more than $1 billion averaging a 77% gain. The performance of these new companies on the list highlights strong investor demand in high-growth sectors like artificial intelligence and cryptocurrency.
Equity fund inflows have also driven this upward trend, particularly for IPO-focused exchange-traded funds (ETFs). Notable IPOs include Circle Internet Group and CoreWeave, both of which experienced significant first-day rallies.
The renewed interest in IPOs after a challenging period marked by tariff uncertainties earlier this year shows that investor enthusiasm for high-growth, disruptive companies is stronger than ever. Despite some long-term worries about IPO performance, the current market conditions offer a positive outlook for new public companies.
