Nasdaq Hits Record as Traders Brace for Fed Rate Decision
The Nasdaq Composite touched a fresh record high Friday, lifted by gains in Tesla, while traders weighed signs of cooling inflation and a weaker labor market as reasons for the Federal Reserve to ease rates next week.
The Nasdaq rose 0.3%, while the S&P 500 hovered near flat and the Dow Jones Industrial Average slipped 207 points, or 0.5%, shortly before the mid-session.
Despite the pullback in the Dow, all three indexes remain on track for weekly gains, with the S&P 500 up 1.6%—its best performance in more than a month.
Will the Fed cut rates next week?
Markets are fully pricing in a 25-basis-point cut when the Fed meets on September 17, according to CME’s FedWatch tool. Traders see little chance of a surprise, as officials have signaled they prefer to move in line with expectations.
This week’s data supports that view: jobless claims spiked to their highest level since October 2021, while revisions showed weaker job growth. At the same time, consumer prices rose more than expected in August, but the labor market weakness overshadowed inflation concerns. Analysts argue this mix points to a Fed prepared to ease.
How are economic signals shaping sentiment?
Consumer sentiment slipped sharply in September, hitting its lowest reading since May at 55.4 in the University of Michigan survey. Economists had expected 58.1, highlighting how higher costs and softening job conditions are weighing on households. Combined with a cooling labor market, weaker sentiment reinforces the case for policymakers to provide support through lower borrowing costs.
Which stocks are making headlines?
Tesla’s gains powered the Nasdaq, but several individual movers also caught attention. Super Micro Computer jumped 6% after launching shipments of its Nvidia Blackwell Ultra solutions, extending AI-related momentum.
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See all Dow Jones forecastsWarner Bros. Discovery surged nearly 8% following Thursday’s 29% spike, after reports of a potential Paramount Skydance takeover bid.
On the downside, RH dropped 8% after cutting its revenue outlook, while Adobe rose over 3% on stronger-than-expected earnings of $5.31 per share against forecasts of $5.18.
What should traders watch next?
Attention now turns squarely to next week’s Fed meeting, where policymakers will release updated economic projections alongside the expected rate move.
Traders will be parsing commentary for signals on how the central bank views growth, inflation, and the appropriate pace of easing.
With equities sitting near record highs and bond markets anticipating a supportive policy shift, the tone of Chair Jerome Powell’s press conference could set the stage for market direction into the final stretch of September.
More Information in our Economic Calendar.