Happy Friday everyone. We finally got the rate cut we’ve been talking about for six months. Read on for what happened.
📊 Weekly Market Recap
- S&P 500 return Year-to-date were approximately 13.56%
- S&P 500 return over the past month were approximately 4.20%
- S&P 500 return over the past 7 days were approximately 1.22%
This Week in the Markets- 3 Things to know
- Two More Cuts Likely in 2025- Markets are now pricing in the likelihood of not just one but two cuts before the end of the year. This outlook reflects a shift from cautious optimism to a near-consensus that the Fed will need to move aggressively to support slowing growth. However, the size and timing of those cuts remain hotly debated, with the risk that larger cuts could backfire by sending a panic signal. Investors are watching every economic print closely to gauge how committed the Fed will be in easing conditions.
- Nvidia’s $5 Billion Bet on Intel- One of the biggest surprises this week was Nvidia announcing a $5 billion investment into Intel. This move signals Nvidia’s intent to secure chip-making capacity and diversify its supply chain, especially as AI demand continues to accelerate. Intel, which has been struggling to keep pace with rivals, suddenly finds itself backed by the industry leader in GPUs. The news sparked major reactions, leaving investors to wonder whether this is a one-off partnership or the start of a deeper collaboration between two tech giants.
- Shadow Moves in Private Credit– Private credit has been stealing attention from traditional banks, but it’s happening under the radar. Big money managers are quietly funneling billions into these loans, stepping in where banks have pulled back. The catch? Returns look attractive, but the risks are buried in opaque deals that don’t get much sunlight. It’s one of those corners of the market that feels quiet now but could roar if the cycle turns. For now, it’s being pitched as a safe, but history shows that “safe” often gets tested when liquidity dries up. If cracks appear, it could reveal just how much leverage is hiding beneath the surface.
A long awaited Fed meeting finally gave us our first rate cut of the year. The Fed just cut rates by 25 basis points, bringing the federal funds target range down to 4.00%–4.25%. This marks the first rate cut since December 2024, a decision driven by signs of slowing economic activity and a labor market showing cracks in both hiring and wage growth. Importantly, the Fed’s dot plot projections point toward two more quarter-point cuts by year-end, which would bring rates closer to 3.50%–3.75% under the median outlook.
This week’s cut was so heavily expected that it was fully priced-in. Meaning nothing dramatic actually happened on Wednesday when it was announced. In fact, based on other news, bond yields actually rose the following two days, and we end the week higher than we started (see below for the 5-day chart)
While investors largely welcomed the cut, Fed officials emphasized that policy remains highly data-dependent, with each meeting open for reconsideration depending on inflation, employment, and global risks. Notably, this was so expected that it was fully priced in.
Looking forward, several paths remain possible. The baseline expectation is that the Fed will deliver two more cuts this year, one in October and another in December, helping to gradually ease financial conditions as inflation edges lower. In this scenario, unemployment rises only modestly, and growth slows but does not collapse, allowing for a softer landing.
A more dovish path could emerge if labor market weakness intensifies through layoffs or stalled wage growth, or if inflation falls faster than expected, which might push the Fed to deliver a larger 50-basis-point cut in December or even consider an inter meeting move.
On the other hand, a more hawkish or cautious stance could take shape if inflation proves stubborn, particularly in sticky categories like services or energy. In that case, the Fed might scale back to just one more cut or even pause after October, leaving rates higher for longer.
There is also the wildcard of external shocks such as tariffs, supply disruptions, or financial instability that could force the Fed to tread carefully. Ultimately, the message is clear: while easing is underway, the exact pace and depth will be dictated by how the economy evolves in real time.
S&P 500 SECTOR SNAPSHOT- Past Month
Top Movers In the Market This Week
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