The Mid-Day Buzz

Sophia Reyes · September 26, 2025 12:15 PM

September 26^th, 2025

Stocks climb as inflation data meets expectations.

U.S. equity markets opened higher Friday after the Federal Reserve’s preferred inflation gauge, the personal consumption expenditures (PCE) index, held steady in August in line with forecasts.

The Dow Jones Industrial Average rose roughly 0.8%, leading gains, while the S&P 500 gained 0.5%. The tech-heavy Nasdaq Composite climbed 0.3% after three straight days of losses for the major U.S. indexes.

Overseas, most Asian markets finished lower overnight, weighed down by pharmaceutical shares after President Trump announced 100% tariffs on branded drugs. Companies can reportedly sidestep the levies by expanding manufacturing in the U.S.

Economic Takeaways:

• Bond yields moved higher, with the 10-year U.S. Treasury yield at 4.17%, up from its early-September low of 4.0%.
• The U.S. dollar is weakening against major currencies.
• WTI crude is trading higher as Russia cuts fuel exports in response to Ukrainian attacks on its energy infrastructure.
• Core PCE inflation steady, headline ticks up – Core PCE inflation, which excludes food and energy, held at a 2.9% annual rate in August, matching estimates, while headline PCE inflation rose slightly to 2.7% year over year. Goods prices are up just 0.9% from a year ago, helping to offset faster-rising services prices of 3.6%. Shelter inflation remains at 3.9% annually, a key driver of elevated services costs.
• Unemployment remains relatively low at 4.3%, with 7.2 million job openings just under the 7.4 million unemployed, suggesting the labor market is cooling but not collapsing.
• Income and spending continue to rise – Personal income increased 0.4% month over month in August, ahead of expectations for 0.3%, while personal consumption expenditures climbed 0.6%, topping forecasts of 0.45%.
• Rate-cut odds tick higher – Following the latest PCE data, the CME FedWatch Tool put the odds of a Fed rate cut next month just below 88%, up from 85.5% a day earlier. Markets still price roughly a 61% chance of two cuts by year-end.
• Eyes on earnings forecasts – FactSet is set to release its updated S&P 500 earnings expectations later today. Previously, analysts projected third-quarter EPS growth of 7.7%.
• Foreign investors now hold about 30% of their U.S. assets in equities, near record highs and above the long-term average.
• Silver’s rally continued on Friday, pulling the precious metal closer to its 2011 high of $49.

PCE Data.

August’s reading of the Personal Consumption Expenditures (PCE) index, which contains the Fed-favored “core” PCE measure of inflation, showed prices rising in line with expectations. The “core” PCE price index rose 2.9% year over year and 0.2% month over month in August, both coming in alongside what economists were expecting, even as inflation remained sticky and well above the Fed’s 2% target.

Consumer sentiment weakens more than expected in September.

U.S. consumer confidence deteriorated more sharply than anticipated this month, according to final September data from the University of Michigan survey released Friday. The headline index fell to 55.1, below economists’ expectations for 55.4 and down from 58.2 in August and 70.3 a year ago. Preliminary results on Sept. 12 had already signaled a larger-than-expected dip, with survey director Joanne Hsu attributing the weakness to concerns over the impact of President Trump’s tariffs.

“Interviews this month highlight the fact that consumers feel pressure both from the prospect of higher inflation as well as the risk of weaker labor markets,” Hsu said Friday. She noted that 44% of respondents spontaneously cited high prices eroding their finances—the highest reading in a year.

The final report showed notable differences across groups. Sentiment among households with larger stock holdings held steady in September, while it declined among those with smaller or no holdings. By political affiliation, confidence slipped about 9% among independents and 4% among Republicans but rose for Democrats.

Inflation expectations offered a slightly brighter note. Year-ahead expectations eased to 4.7% in September from 4.8% the prior month, contrary to economists’ forecasts for no change. Long-run (five- to ten-year) inflation expectations edged up to 3.7% from 3.5% in August but remained below the 3.9% economists had projected.

The sentiment figures follow the Fed’s preferred inflation gauge, the Personal Consumption Expenditures (PCE) index, which showed core inflation easing modestly in August as expected—helping reinforce traders’ confidence in an October rate cut.

Tik Tok Deal

President Trump signed an order approving a deal to separate TikTok’s U.S. operations from China’s ByteDance, though the agreement still requires Beijing’s approval. The proposed $14 billion price tag caught Wall Street off guard, as many analysts view it as far below the roughly $40 billion valuation often attached to the global social media leader.

On the Move

• Oracle extends slide as AI concerns weigh – Oracle (ORCL) dipped slightly in early Friday trading after falling for a third straight session Thursday, shedding 5.6% and moving roughly 16% off its recent high. Analysts cite profit-taking and skepticism over the company’s AI investments and a possible TikTok stake as key reasons for the pullback.
• Intel rallies on Apple investment buzz – Intel (INTC) gained another 4.7% early Friday, building on Thursday’s 8.9% jump after Bloomberg reported Apple (AAPL) had approached the chipmaker about taking an equity stake.
• CarMax plunges after earnings miss – CarMax (KMX) tumbled 20.1% Thursday, the S&P 500’s worst performer of the day, after a sharp top- and bottom-line miss.
• Big Pharma climbs on tariff exemptions – Shares of Eli Lilly (LLY), Merck (MRK), and Pfizer (PFE) rose more than 1% early Friday after President Trump announced 100% tariffs on pharmaceutical imports, with carve-outs for firms building U.S. plants. Several large-cap drugmakers have already committed to expanding domestic production, fueling the rally.
• Paccar surges on truck tariff news – Paccar (PCAR) jumped 6.3% early Friday after the Trump administration unveiled 25% tariffs on heavy trucks made outside the U.S. The company, which owns Peterbilt and Kenworth, manufactures about 90% of its U.S. trucks domestically, CNBC reported.
• Costco slips despite earnings beat – Costco (COST) fell more than 1% even after topping profit estimates. Same-store sales grew 6%, slightly below forecasts, and the retailer noted consumers remain “very choiceful” on discretionary spending, according to Yahoo Finance.
• Furniture names under pressure on tariff risk – Wayfair (W) slid 2.6% ahead of the open, while RH (RH) and Williams-Sonoma (WSM) also lost ground after Barron’s reported Trump may impose new tariffs on kitchen cabinets, bathroom vanities, and furniture.
• Crypto slides as yields climb – Bitcoin (/BTC) dropped to a three-week low below $109,000 Thursday and extended losses Friday. The slump weighed on crypto-linked names: MicroStrategy (MSTR) fell nearly 7% and Coinbase (COIN) lost 4.7% Thursday, with both trading lower again early Friday. Analysts linked the weakness to a stronger-than-expected U.S. GDP print that pushed Treasury yields higher.

What’s Ahead

Next week investors will watch for expected earnings from Carnival (CCL).

September 30 brings the September Consumer Confidence report, August JOLTS job openings, and expected earnings from Lamb Weston Holdings (LW) and Nike (NKE).

October 1 will feature the ADP Employment Change report, ISM Manufacturing PMI, and expected earnings from Conagra (CAG), followed by August Factory Orders on October 2.