Source: FactSet
Global markets continued to march ahead in September 2025, largely driven by the Federal Reserve’s first interest rate cut of the year. Despite ongoing concerns about a slowing labor market and elevated inflation, the potential for lower borrowing costs fueled broad-based gains across equities and fixed income.
Major U.S. stock indices, including the S&P 500, Nasdaq, and Dow Jones, closed the month at new all-time highs. Within US equities, the technology sector was a major outperformer, rebounding strongly after a weaker August. A continued AI investment boom also boosted related stocks. However, not all sectors participated in the rally; defensive segments of the markets, like consumer staples, saw losses as investors leaned into risk.
Within the U.S equity markets, large-cap growth stocks continued to show leadership with the strongest monthly and yearto-date results, as measured by the NASDAQ Composite. Also, smaller companies that have a higher-interest-rate sensitivity have improved materially in recent months as the Fed restarts interest rate cuts.
AI enthusiasm was not relegated to the U.S. alone; emerging markets equities also benefited as investors looked to China for other AI opportunities.
Within bonds, the Federal Reserve cut rates by 25 basis points to a range of 4.00%-4.25%. This was driven by a weakerthan-expected August jobs report and downward revisions to previous months’ payroll data, raising employment concerns. The Fed’s move and the prospect of further cuts pushed bond yields lower, and thus bond prices higher.
Lastly, gold prices reached new all-time highs during the month, driven by market uncertainty and investor sentiment.
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