September 12th, 2025
Equities hover near record highs.
U.S. stocks were mixed in early Friday trading, with the tech-heavy Nasdaq inching higher, the large-cap S&P 500 little changed, and the Dow Jones Industrial Average slipping slightly. This comes after a mildly upbeat session overseas, where European indices generally advanced and Japan’s Nikkei rose nearly 1%.
The Dow Jones Industrial Average (^DJI) fell 0.4%, while the S&P 500 (^GSPC) traded roughly flat. Meanwhile, the tech-heavy Nasdaq Composite (^IXIC) climbed around 0.4% as Tesla (TSLA) stock was set for a seven-month high. All three major indexes rallied to records on Thursday, with the Dow closing above 46,000 for the first time.
Economic Takeaways:
- Following September’s robust rally, government bonds are showing some weakness this morning: the 10-year U.S. Treasury yield has climbed 4 basis points to 4.06%, still near the lower end of its 2025 range.
- The dollar is modestly stronger against a trade-weighted basket of currencies.
- WTI crude is moving higher amid concerns that Ukrainian drone strikes could disrupt Russian oil supplies and after President Trump urged G7 allies to hike tariffs on China and India to discourage their purchases of Russian oil.
- The University of Michigan’s preliminary September survey showed U.S. consumer sentiment falling to its weakest level since May, as households reported mounting concerns over inflation and the labor market. Long-term inflation expectations climbed to 3.9% from 3.5% in August, while fears about job losses also rose, echoing recent data showing hiring remains sluggish and layoffs are beginning to edge up.
- As of this morning, chances of a 25-basis point cut stood at 93% while odds of a 50-basis point cut were 7%, according to the CME FedWatch Tool.
Consumer Sentiment Weakens as Tariff Concerns Grow
American consumers grew more downbeat in September as worries over President Trump’s tariffs weighed on confidence. The University of Michigan’s preliminary consumer sentiment index dropped to 55.4 from 58.2 in August, missing the 58 forecast by economists surveyed by Bloomberg. Joanne Hsu, who directs the university’s surveys, said roughly 60% of respondents offered unprompted comments about tariffs during interviews, a level little changed from last month. “Consumers continue to note multiple vulnerabilities in the economy, with rising risks to business conditions, labor markets, and inflation,” she said.
The survey also showed that long-term inflation expectations for the next five to 10 years rose to 3.9% from 3.5% in August, above economists’ 3.4% estimate but still well below April’s 4.4% reading. Year-ahead inflation expectations held steady at 4.8%, matching projections. The report followed August’s consumer-price data showing inflation ticking higher, a sign that tariffs may be filtering through to prices. Even so, softening job-market data is expected to weigh more heavily on the Federal Reserve’s upcoming policy decision, with investors debating not only the size of a September rate cut but how many additional moves may follow.
Morgan Stanley Sees Faster Fed Easing
That debate over the Fed’s next steps intensified Friday after Morgan Stanley forecast a more aggressive easing path than most of Wall Street expects. The firm said it anticipates the central bank will cut interest rates at each of its three remaining meetings this year—September, October and December—and again in January, with all moves in quarter-point increments. Most investors currently expect the Fed to pause after December, with the first cut of 2026 not coming until April, according to Bloomberg’s market pricing.
Economists led by Michael Gapen argued that softer inflation and a weakening labor market give policymakers room to push more decisively toward a neutral policy stance. After January, Morgan Stanley expects the Fed to pause temporarily to assess how inflation evolves, noting that price pressures often flare in the first quarter. “Once that noise clears, we anticipate further cuts in April and July as labor market deterioration continues,” they wrote. If correct, the forecast would put the Fed’s target range at 3.5% early next year—well below today’s level and a sharper drop than markets are currently pricing.
On the Move
- Adobe (ADBE) climbed 3.2% in premarket trading Friday after reporting quarterly earnings and revenue late Thursday that beat Wall Street estimates. Guidance also topped expectations, and the company highlighted that 99% of Fortune 100 firms have used AI in an Adobe application, according to Barron’s. Shares of rival Figma (FIG) added more than 1% this morning, extending Thursday’s nearly 10% surge.
- Tesla (TSLA) rose 6% Thursday to its highest level since May as optimism over looming Fed rate cuts bolstered sentiment around the electric-vehicle maker.
- General Motors (GM) advanced 1.5% in early trading after Barclays upgraded the stock to Overweight from Equal Weight, citing a more favorable backdrop as U.S. EV regulations ease and car pricing stays resilient. The bank also sees GM positioned to narrow its electric-vehicle losses.
- Opendoor Technologies (OPEN) fell 3.4% early Friday following a massive 79% jump the prior day. The home-flipping company spiked after naming a new CEO, a former Shopify (SHOP) executive.
- Netflix (NFLX) fell 3.5% Thursday after announcing that Chief Product Officer Eunice Kim will depart. Kim helped drive the streamer’s password-sharing crackdown and expansion into live shows, advertising, and gaming.
- Shares of luxury furniture retailer RH dropped 9% this morning after both earnings and revenue missed estimates. The company also cut its full-year outlook, citing tariffs as a headwind.
- Delta Air Lines (DAL) slipped 1.6% Thursday even after raising its third-quarter revenue growth forecast to 2–4% from 0–4%. Corporate travel remains strong, but the airline continues to struggle with filling economy seats, Barron’s
- Warner Bros. Discovery (WBD) jumped nearly 29% Thursday and another 10% ahead of Friday’s open following a Wall Street Journal report that Paramount Skydance (PSKY) is preparing a takeover bid backed by the Ellison family. Paramount Skydance shares also rose 16% Thursday on the news.
- Applied Materials (AMAT) slipped 1.2% after Mizuho cut its rating to Neutral from Outperform, warning of shifting market share in the wafer-fabrication equipment sector as Chinese competitors and new technologies intensify the landscape.
- Super Micro Computer (SMCI) jumped 6.6% ahead of the open after announcing broad availability of its AI Blackwell Ultra systems powered by Nvidia (NVDA) chips.
- Microsoft (MSFT) added 1% before the bell after signing a nonbinding memorandum of understanding with OpenAI to expand their partnership. Bloomberg also reported Microsoft is exploring taking an equity stake of at least $100 billion in the AI company.
- With Treasury yields falling and rate-cut bets rising, the average 30-year fixed mortgage rate fell to 6.35% Thursday, an 11-month low. Homebuilder stocks including Lennar, D.R. Horton (DHI), and KB Home (KBH) gained more than 2% each. Lennar reports next Thursday, a day after August housing starts and building-permits data.
- Ten of the S&P 500’s 11 sectors advanced Thursday, led by materials, real estate, and healthcare. Energy edged lower. Advancers outpaced decliners for the first time this week after three straight sessions of weaker breadth—offering a tentative sign of improving market participation.
- Just one day after Boeing’s CEO acknowledged delays in certifying its newest widebody jet, the Federal Aviation Administration proposed a $3.1 million fine over multiple safety violations. Boeing shares dropped more than 1% on Friday and were on track for a 5.5% weekly loss.
- Cryptocurrencies advanced Friday and were poised to finish the week higher. Bitcoin (BTC-USD) edged up less than 1%, ethereum (ETH-USD) gained 3.6%, solana (SOL-USD) jumped 5.4%, and both XRP (XRP-USD) and BNB (BNB-USD) rose more than 1.5%, leaving bitcoin and ethereum on track for weekly gains of about 3% and 6%, respectively, and solana up nearly 12% for the week.
- Vaccine makers’ stocks tumbled on Friday after the Washington Post reported that Trump health officials are planning to link 25 child deaths to COVID-19 vaccines, alarming scientists.
What’s Ahead
Markets have fully priced in a policy rate cut at next week’s Federal Open Market Committee meeting.
More significant, however, will be the Fed’s updated projections for interest rates and Chair Powell’s messaging on the balance between its inflation and employment mandates.
In June, the median policymaker projected two 25-basis-point cuts this year and one in 2026—roughly half of the 150 basis points of easing markets currently anticipate over that period. Investors will be watching closely to see whether Powell signals a willingness to respond swiftly to further labor-market weakness, even if inflation inches up in the near term. Such assurances could help calm recession fears and bolster confidence that the central bank is acting proactively to support growth.
September 15: No major data or earnings.
September 16: August retail sales.
September 17: August housing starts and building permits, FOMC rate decision, and expected earnings from General Mills (GIS) and Bullish (BLSH).
September 18: Expected earnings from FedEx (FDX), Lennar (LEN), and Darden (DRI).
September 19: Bank of Japan rate decision.
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