September Markets: Fed Focus and Mixed Signals

Fresh news and strategies for traders. SPY Trader episode #1356. PostLabor Day, Chartsy Charlie covers positive August market closes despite Friday's dip. The episode highlights conflicting Q3 GDP forecasts, persistent inflation concerns, and the Fed's maintained rates with mixed expectations for a September cut.

Episode Transcript

(00:00):
Hey everyone , and welcome back to Spy Trader , your goto podcast for navigating the financial markets !
I'm your host , Chartsy Charlie , and it's 6 am on Tuesday , September 2nd , 2025 , Pacific time .
We've got a lot to unpack this morning , so grab your coffee and let's dive into the market action .

(00:21):
First up , let's get a quick recap of where we stand .
Wall Street was closed yesterday for Labor Day , so our last full trading day was Friday , August 29th .
Major indices closed lower that day , largely due to some profittaking in technology stocks .
The S&P 500 tumbled 0.6% to finish at 6,460.26 , while the Nasdaq Composite slid 1.2% to 21,455.55 .

(00:55):
The Dow Jones Industrial Average also fell 0.2% to 45,544.88 .
Despite that Friday dip , all three major indexes finished August in positive territory , with the S&P 500 up 1.9% for the month , bringing its yeartodate gain to about 10% .

(01:19):
Over the past year , the S&P 500 is up a solid 15.10% .
On the macroeconomic front , we're seeing some mixed signals .
The Atlanta Fed's GDPNow model is estimating a substantial jump in Q3 2025 GDP growth to 3.5% , which is a big leap from 2.2% earlier in the quarter , thanks to strengthened consumer spending and a resilient job market .

(01:50):
However , Goldman Sachs recently cut its Q3 U.S.
GDP forecast to a more modest 1.6% due to an unexpected expansion in the goods trade deficit .
Inflation remains a sticky concern ; the annual inflation rate for the U.S.
was 2.7% for the 12 months ending July , and the Fed's preferred gauge , the core Personal Consumption Expenditures price index , edged up slightly to 2.9% annually in July .

Now , about the Federal Reserve and interest rates (02:20):
they've maintained the federal funds rate at 4.25%4.50% since December 18 , 2024 , marking their fifth consecutive hold .
The next rate decision is September 17th , and expectations are mixed .
While some , like JPMorgan , anticipate a 25basispoint cut due to a slowing labor market , others , such as Morgan Stanley , are more cautious , citing persistent inflation .

(02:50):
Market odds for a September rate cut were high in late August , between 8089% , but some experts think it's already