Pre-Weekend Pause: Rally Slows After Record Highs
Published as of: September 12, 2025, 9:15 a.m. ET
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| The markets | Last price | Change | % change |
|---|---|---|---|
| S&P 500® index | 6,587.47 | +55.43 | +0.85% |
| Dow Jones Industrial Average® | 46,108.00 | +617.08 | +1.36% |
| Nasdaq Composite® | 22,043.07 | +157.01 | +0.72% |
| 10-year Treasury yield | 4.06% | +0.05 | -- |
| U.S. Dollar Index | 97.81 | +0.28 | +0.29% |
| Cboe Volatility Index® | 14.71 | Unch | Unch |
| WTI Crude Oil | $63.59 | +$1.22 | +1.68% |
| Bitcoin | $115,340 | +$410 | +0.36% |
Disclosure
Major index values are as of Thursday's close; others are as of 8:49 a.m. ET.
(Friday market open) Stocks took a breather early Friday but major indexes remain on pace for solid weekly gains. Today's a little light on data after the inflation and jobs derby that just ended. "Jobless claims jumped to the highest level since 2021 while inflation remains elevated," said Kathy Jones, chief fixed income strategist at Schwab. "It likely won't deter the Fed from cutting rates next week, but it's a tough combination for monetary policy going forward."
Investors get a raft of data in coming days, highlighted by retail sales, housing starts, and the Conference Board's Leading Economic Index®. But the Fed's rate decision, updated economic and rate projections, and Fed Chairman Jerome Powell's press conference Wednesday afternoon are the main events. 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. Hopes for 50 helped propel this week's rally, and Thursday's slightly elevated Consumer Price Index (CPI) didn't stop the party. The question is whether just 25-basis points might disappoint.
Stocks rolled up more record highs Thursday with broad participation across most sectors, unlike the narrower rallies earlier this week. The percentage of S&P 500 stocks above their 50-day moving average topped 63% yesterday, but even that's relatively low breadth considering index strength. The biggest stocks still twirl the baton in this parade, potentially making the market vulnerable to any sudden pullback in the high-flying tech and communication services arenas.
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Three things to watch
- Sentiment ahead: This week's rapid round of U.S. data concludes at 10 a.m. ET today with the University of Michigan's preliminary September consumer sentiment report. Analysts expect another less-than-stellar headline and may focus on inflation and economic expectations, considering recent job market weakness and inflation well above the Fed's 2% target with annual CPI at 2.9%. Consensus for headline sentiment is 59.2, according to Briefing.com, up from the prior 58.2 but way off levels above 80 often seen before the pandemic. August retail sales next Tuesday are another consumer touchpoint after a strong 0.5% gain in July.
- Data hint at potential tariff impact on profits: Wednesday's August Producer Price Index (PPI) report showed the services category hit by the sharpest slide in final demand trade services since July 2024, possibly something to keep in mind when earnings season rolls around. Final demand trade services is a category that didn't get much attention before tariffs, but affects margins received by wholesalers and retailers—or the difference between a trader's purchasing cost of a good and the price that the trader charges the final buyer. The recent dip suggests that wholesalers aren't passing along tariff-related price increases. This may lead to tighter corporate margins if cost pressures don't translate into higher consumer prices. If this squeezes corporate margins, it might be a headwind to earnings growth.
- High valuations take toll: Sharp declines in the share prices of Chewy (CHWY) and Synopsys (SNPS) earlier this week and RH (RH) today reinforced ideas that investors will harshly punish companies that don't impress with results, perhaps not surprising considering the market's historically high valuation. High stock values also play into the fact that equity risk premium is now basically negative, depending on which part of the yield curve one looks at. When this premium goes negative, it's a sign of the market suggesting that stocks are no more compelling than Treasuries or corporate bonds. It also might make the stock market rally even more dependent on rate cuts. Speaking of which, the Senate will vote Monday on confirming Stephen Miran as a Fed governor in time for him to vote in the Fed's meeting next Wednesday.
On the move
- Adobe (ADBE) rose 3.2% in pre-market trading after the software company's earnings and revenue late Thursday surpassed Wall Street's consensus. Guidance was slightly above expectations as well, and the company said 99% of Fortune 100 companies have used AI in an Adobe app, Barron's reported. Shares of Adobe rival Figma (FIG) climbed more than 1% this morning after a nearly 10% rise Thursday.
- Tesla (TSLA) shares got a spark Thursday, rising 6% to their highest level since May amid hopes that anticipated rate cuts could help the EV maker's business.
- General Motors (GM) climbed 1.5% in early trading after getting an upgrade to Overweight from Equal Weight from Barclays. The firm sees a favorable environment for the company amid easing U.S. electric vehicle regulations and "resiliency" in U.S. car pricing. It also thinks GM has an opportunity to narrow its EV losses.
- Opendoor Technologies (OPEN) fell 3.4% early today after yesterday's 79% rally. The company, which buys and sells residential real estate, saw shares climb the ladder after the company named a new CEO who had been an executive at Shopify (SHOP).
- Netflix (NFLX) fell 3.54% Thursday after announcing Chief Product Officer Eunice Kim will leave the company. Kim played a key role in the streaming giant's password-sharing crackdown and helped expand their offerings into live shows, advertising, and gaming.
- Shares of furniture retailer RH dropped 9% this morning. Earnings missed Wall Street's consensus, and so did revenue. The firm also lowered its outlook for the current fiscal year, partly due to tariffs.
- Shares of Delta Air Lines (DAL) slipped 1.55% Thursday despite a more optimistic revenue forecast from the airline. Delta now expects its third quarter revenue to rise between 2% and 4%, compared to its prior estimate of 0% to 4%. A strong summer for corporate travel has bolstered revenues, but the airline is still struggling to fill economy-class seats, Barron’s reported.
- Warner Bros. Discovery (WBD) stock popped nearly 29% Thursday and another 10% ahead of Friday's open after The Wall Street Journal reported that Paramount Skydance (PSKY) is preparing a takeover bid backed by the Ellison family, citing people familiar with the matter. Shares of Paramount Skydance also rose 16% Thursday on the news.
- Applied Materials (AMAT) fell 1.2% on a downgrade to Neutral from Outperform by Mizuho. The firm sees share shifts within the wafer fabrication equipment industry as China competition and technology transitions drive increased competition.
- Super Micro Computer (SMCI) jumped 6.6% ahead of the open. The company announced the broad availability of its AI Blackwell Ultra solutions powered by Nvidia (NVDA) chips.
- Microsoft (MSFT) edged 1% higher before the open. The company signed a non-binding memorandum of understanding with OpenAI for the next phase of their partnership. Additionally, Bloomberg reported that Microsoft seeks to acquire an equity stake of at least $100 billion in OpenAI.
- Falling Treasury yields and the prospect of Fed rate cuts led the average 30-year fixed mortgage rate to drop to 6.35% on Thursday, an 11-month low. That helped homebuilder stocks including Lennar, D.R. Horton (DHI), and KB Home (KBH) to rise more than 2% each yesterday. Lennar reports next Thursday, a day after investors get August housing starts and building permits data.
- Ten of 11 S&P 500 sectors rose Thursday, led by materials, real estate, and healthcare. Energy fell, but only slightly. In a departure from earlier this week, advancing shares far outnumbered declining ones on Wall Street. Stocks had risen despite decliners outpacing advancers the three sessions preceding yesterday. While one day isn't a trend, it demonstrates improving breadth.
More insights from Schwab
Wall Street paging D.C.: Musical chairs at the Fed, including President Trump's attempt to unseat Fed Governor Lisa Cook before next week's meeting, are among Washington events that could affect Wall Street. There's also the tariff court battle and the chance of a government shutdown. Get insight on these and more in Schwab's new Washington Wise podcast featuring Michael Townsend, managing director, legislative and regulatory affairs.
Fed preview: In their latest OnInvesting podcast, my colleagues Chief Investment Strategist Liz Ann Sonders and Chief Fixed Income Strategist Kathy Jones discuss the recent downward revision in job market statistics, the implications for the economy, and the likelihood of a rate cut next week. They analyze the broader economic context of the job revisions, the importance of indicators like the Producer Price Index, and the impact of global market volatility.
September market overview: Join Sonders for her latest look at trends in her Market Snapshot video. "All signs are pointing to a labor market having lost some pretty meaningful steam," she says. There've been substantial gains in "non-cyclical" categories like education and health services, but those have been at least partially offset by weakness in more cyclically oriented sectors like wholesale trade, professional and business services, and manufacturing. The cyclicality of the losing sectors further points to broad economic weakness.
Options income ETFs primer: As investors explore more creative ways to boost cash flow without abandoning stock market exposure, exchange-traded funds (ETF) reliant on options trading strategies have surged in popularity. Learn how options income ETFs work, their potential benefits, and key risks to consider in a new ETF guide from Schwab.
Chart of the day
Data source: Cboe, ICE. Chart source: thinkorswim® platform.
Past performance is no guarantee of future results.
For illustrative purposes only.
The 10-year U.S. Treasury note yield (TNX:CGI—candlesticks) has finally joined the dollar index ($DXY—purple line) at multi-month lows as investors await next week's anticipated Fed rate cut. Though both often fall when rate policy eases, the dollar has been weak all year due partly to tariff policy and concerns foreign investors might veer away from U.S. assets, one reason why gold is at record highs. The dollar's downward move took on more steam this week as the European Central Bank (ECB) kept rates unchanged. "More rate cuts for the U.S. relative to the rest of the world—particularly the ECB where the euro is 57% of the U.S. dollar index—could keep downward pressure on the dollar, which could boost returns for international stocks," said Michelle Gibley, director of international research at the Schwab Center for Financial Research.
The week ahead
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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