Market Performance and Holiday Schedule
Most U.S. equity indexes ended the week modestly lower on relatively light trading volumes, as markets prepared for the Labor Day holiday and the unofficial end of summer. Notably, the Russell 2000 Index (representing small-cap stocks) posted moderate gains, outperforming the S&P 500 Index for the third consecutive week. The Dow Jones Industrial Average reached a new record high midweek but lost ground on Friday, finishing the week lower[1].
- U.S. markets closed Monday, September 1, in observance of Labor Day[1].
- Small-cap stocks led gains, particularly the Russell 2000 Index[1].
- S&P 500 underperformed relative to small-caps[1].
- Dow Jones reached record highs before declining by week's end[1].
Focus on Artificial Intelligence and NVIDIA Earnings
The week’s economic news was relatively light. However, considerable investor attention focused on NVIDIA’s earnings release after markets closed on Wednesday. NVIDIA, currently the world’s most valuable company by market capitalization, reported results that generally beat consensus estimates. Although its stock pulled back slightly on Thursday, the report helped ease concerns about the sustainability of the artificial intelligence-driven rally propelling equity indexes to record highs this year[1].
- NVIDIA earnings beat FactSet consensus estimates[1].
- Analysts reassured about the artificial intelligence-driven rally after NVIDIA's results[1].
Federal Reserve Developments and Trump’s Announcement
Concerns regarding the Federal Reserve’s independence increased after President Donald Trump announced the removal of Fed Governor Lisa Cook, citing allegations of mortgage fraud. Cook responded by filing a lawsuit to block the firing on Thursday. A Federal Reserve spokesperson stated the central bank would abide by the court's decision[1].
- President Donald Trump announced firing of Fed Governor Lisa Cook[1].
- Lisa Cook filed a lawsuit seeking to block the firing[1].
- Federal Reserve will adhere to upcoming court rulings[1].
Interest Rate Policy Updates
Governor Christopher Waller, who recently advocated for a 25-basis-point rate cut, reaffirmed his position for a similar cut at the Fed’s next meeting. Waller also projected “additional cuts over the next three to six months” due to heightened downside risks in the labor market and significant slowing in economic activity[1].
- Governor Waller calls for 0.25% rate cut in upcoming meeting[1].
- Predicts more rate cuts over the next three to six months[1].
- Labor market risks and slowing economic activity cited as reasons[1].
Governor Waller calls for 0.25% rate cut in upcoming meeting[1].
Governor Waller calls for 0.25% rate cut in upcoming meeting[1].
