Wall Street was upbeat last week despite facing a slew of downbeat economic data points. Jobs data came in softer, consumer sentiment was weaker, and inflation came in hotter. Still, hopes of a Fed rate cut this month may have boosted market performance.
Meanwhile, corporate strength remained resilient, IPO markets remained strong, and the tech boom fueled by the AI euphoria remained in place. The heightened trade tensions, too, have receded to a large extent.
Overall, the S&P 500 gained by 1.6%, the Dow Jones advanced by 0.9% and the Nasdaq Composite surged by 2%. Let’s discuss the week in detail.
The University of Michigan’s preliminary Survey of Consumers revealed that overall sentiment declined to 55.4 in September, marking a 4.8% sequential decline and a 21% year-over-year drop. It was also the lowest reading since May, as quoted on Yahoo Finance.
Index of Consumer Expectations fell by 7.3% sequentially and 30.4% annually to 51.8 in September, while the Current Economic Conditions were not that bad. The sentiment around the current economic conditions slipped 0.8% month on month and 3.3% year over year to 61.2. Consumers are probably fearing the uncertainty regarding tariffs and the likelihood of higher inflation.
The U.S. annual inflation rate grew to 2.9% in August 2025, the highest since January, after staying the same at 2.7% in both June and July, in line with market expectations, as quoted on tradingeconomics.
On a monthly basis, the CPI rose 0.4%, the highest since January, above forecasts of 0.3%, per the above-mentioned tradingeconomics article. The increase was fueled by rise in gasoline prices and stronger food inflation.
Core inflation held steady at 3.1%, unchanged from July and in line with February’s high. On a monthly basis, core CPI increased 0.3%, in line with July’s growth and market expectations, as mentioned in the same tradingeconomics article.
The U.S. economy added 22,000 jobs in August 2025, lower than an upwardly revised 79,000 in July and market forecasts of 75,000, as quoted on tradingeconomics. Jobs data for June were revised down by 27,000, and the change for July was revised up by 6,000.
With these revisions, the previously reported employment data for June and July combined got cut by 21,000. The unemployment rate, at 4.3%, changed little in August, according to government data.
Job growth was mainly noticed in sectors such as health care and social assistance. Job losses were also pronounced in wholesale trade and manufacturing.
