The S&P 500 Index ($SPX) (SPY) on Friday closed up +0.49%, the Dow Jones Industrials Index ($DOWI) (DIA) closed up +0.37%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed up +0.70%. December E-mini S&P futures (ESZ25) rose +0.42%, and December E-mini Nasdaq futures (NQZ25) rose +0.68%.
Stock indexes rallied on Friday, with the S&P 500, the Dow Jones Industrials, and the Nasdaq 100 posting new all-time highs. The prospects for additional Fed interest rate cuts have sparked risk-on sentiment in asset markets and supported stocks. Market volatility was near normal on Friday despite the quarterly event known as triple-witching, as $5 trillion worth of stock options, futures, and derivatives expired. Higher bond yields on Friday limited gains in stocks, as the 10-year T-note yield rose +2 bp to 4.13%.
Minneapolis Fed President Neel Kashkari said he supported the FOMC’s decision to cut interest rates by 25 bp this week, and he has penciled in two additional cuts this year.
President Trump spoke with Chinese President Xi Jinping by telephone on Friday to discuss a framework agreement to shift control of TikTok’s operations from its Chinese parent, ByteDance Ltd, to a consortium of American investors. Mr. Trump said he made progress on many important issues and will meet Xi on the sidelines of the upcoming Asia-Pacific Economic Cooperation Summit in South Korea next month.
Rising corporate earnings expectations are a bullish backdrop for stocks. According to Bloomberg Intelligence, more than 22% of companies in the S&P 500 provided guidance for their Q3 earnings results that are expected to beat analysts’ expectations, the highest in a year. Also, S&P companies are expected to post 6.9% earnings growth in Q3, up from 6.7% at the end of May.
The markets are pricing in a 92% chance of a -25 bp rate cut at the next FOMC meeting on Oct 28-29.
Overseas stock markets on Friday settled mixed. The Euro Stoxx 50 rose to a 4-week high and closed up by +0.03%. China’s Shanghai Composite closed down -0.30%. Japan’s Nikkei Stock 225 fell from a new record high and posted a 1-week low and closed down -0.57%.
Interest Rates
December 10-year T-notes (ZNZ5) on Friday closed down by -7.5 ticks. The 10-year T-note yield rose by +2.7 bp to 4.131%. T-note prices today extended Thursday’s losses and fell to a 2-week low, and the 10-year T-note yield rose to a 2-week high of 4.143%. T-notes were under pressure Friday due to strength in stocks, which has curbed safe-haven demand for government debt securities. Also, negative carryover from Friday’s slide in European government bonds to 2-week lows is weighing on T-notes. Dovish comments on Friday from Minneapolis Fed President Neel Kashkari lifted T-notes off their lows when he said he has penciled in two additional Fed rate cuts this year.
Concerns about Fed independence are negatively impacting T-note prices due to President Trump’s attempt to fire Fed Governor Cook and Stephen Miran’s intention to hold a Fed Governor position while remaining technically in his White House role on the Council of Economic Advisors.
European government bond yields moved higher on Friday. The 10-year German bund yield rose to a 2-week high of 2.753% and finished up +2.2 bp at 2.748%. The 10-year UK gilt yield climbed to a 2-week high of 4.718% and finished up +3.9 bp at 4.715%.
German Aug PPI fell -0.5% m/m and -2.2% y/y, weaker than expectations of -0.1% m/m and -1.7% y/y, with the -2.2% y/y drop the biggest year-on-year decline in 15 months.
UK Aug retail sales ex-auto fuel rose +0.8% m/m, stronger than expectations of +0.7% m/m and the largest increase in 5 months.
UK Aug government borrowing was 18 billion pounds ($24.4 billion), above estimates of 12.5 billion pounds and the highest borrowing for the month in five years.
ECB Governing Council member Centeno said, “Growth in the Eurozone is below potential and inflation will soon fall below our target and stay there for some time. I believe that it’s more likely than not that we have to ease monetary policy further.”
ECB Governing Council member Muller said the ECB is running a slightly accommodative monetary policy and currently has no reason to lower borrowing costs any further.
Swaps are discounting a 2% chance for a -25 bp rate cut by the ECB at its next policy meeting on October 30.
US Stock Movers
Strength in the Magnificent Seven megacap technology stocks is supportive for the overall market. Apple (AAPL) closed up more than +3% and Tesla (TSLA) closed up more than +2%. Also, Alphabet (GOOGL) and Microsoft (MSFT) closed up more than +1%, Nvidia (NVDA) closed up +0.24%, and Amazon.com (AMZN) closed up +0.11%.
Oracle (ORCL) closed up more than +4% after Bloomberg reported the company is in talks with Meta Platforms for a cloud computing deal worth about $20 billion.
Klaviyo Inc (KVYO) closed up more than +4% after Morgan Stanley upgraded the stock to overweight from equal weight with a price target of $50.
CoreWeave (CRWV) closed up more than +3% after Loop Capital Markets initiated coverage on the stock with a buy recommendation and a price target of $165.
Lincoln National (LNC) closed up more than +3% after Morgan Stanley upgraded the stock to overweight from equal weight with a price target of $58.
FedEx (FDX) closed up more than +2% after reporting Q1 adjusted EPS of $3.83, better than the consensus of $3.59.
Warner Bros Discovery (WBD) closed up more than +2% after CNBC reported a potential bid for the company from Paramount Skydance could be in the $22 to $24 a share range.
Scholastic Corp (SCHL) closed down more than -12% after reporting a Q1 adjusted loss per share of -$2.52, a wider loss than the consensus of -$2.44.
Hess Midstream LP (HESM) closed down more than -10% after saying it expects lower capital spending in 2026 and 2027, citing suspension of early engineering activities on its Capa gas plant and removal of the project from its forward plan.
Cognizant Technology Solutions (CTSH) closed down more than -4% to lead IT consulting stocks lower after Bloomberg News reported that President Trump will move to require a $100,000 fee for H-1B visa applications. According to Bloomberg, nearly half of H-1B visas went to outsourcing or staffing companies.
Humana (HUM) closed down more than -4% after Piper Sandler said the company’s CMS star rating recovery won’t occur until 2027, signaling improved quality bonus payments wouldn’t happen until 2028.
Lennar (LEN) closed down more than -4% after reporting Q3 revenue of $8.81 billion, below the consensus of $9.05 billion, and forecasting Q4 new orders of 20,000 to 21,000, weaker than the consensus of 21,047.
Intel (INTC) closed down more than -3% after Citigroup downgraded the stock to sell from neutral with a price target of $29.
Earnings Reports(9/22/2025)
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On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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