Market Recap - Week of September 22 through September 26, 2025

The S&P 500 index dropped 0.3% this week as the Trump administration unveiled plans for new tariffs on pharmaceuticals, trucks, and furniture.

The S&P 500 ended Friday's session at 6,643.70, marking the gauge's first weekly decline since the week ended Aug. 29.

With two trading sessions remaining in September, the S&P is up 2.8% for the month and 13% this year.

President Donald Trump said the US will impose tariffs of 25% on heavy trucks and 50% on kitchen cabinets and bathroom vanities, effective Wednesday. Additionally, the US will charge 100% levies on branded or patented pharmaceutical products.

The new tariffs added to investors' concerns about inflation. Earlier this week, Fed Chair Jerome Powell said policymakers face a "challenging situation," with near-term risks to costs tilted to the upside and those to employment leaning downside.

The annual headline personal consumption expenditures price index advanced 2.7% last month, compared with 2.6% growth in July, but met market expectations. The Fed's preferred core measure, which excludes food and energy, held steady at 2.9% in August and also met consensus expectations.

By sector, communication services had the largest drop this week, falling 2.7%, followed by a 2% decline in materials and a 1.2% slip in consumer discretionary. Consumer staples, health care, and financials also moved lower.

Facebook parent Meta Platforms (META) fell 4.5% in the week, and Google ( GOOG ) parent Alphabet (GOOGL, GOOG) dropped 3.2%, weighing down the communication services sector. Meta and Alphabet were among the companies that lost their bid to bar expert testimony about the impact of social media on young users during looming trials against the companies.

Meanwhile, the energy sector rose 4.7% this week, followed by a 2.8% gain in utilities and a 0.9% advance in real estate. Technology and industrials edged higher.

Last Week’s Economic Reports

New home sales rose to 800k, up from 664k
Initial claims fell to 218k

S&P 500 Sector and Stylebox Returns

Thought of the Week

Gold prices have surged to record highs in recent years, appreciating over 40% year-to-date to $3,775 per troy ounce. Last year, Gold rose 27% outperforming the S&P’s total return. While gold demand in volume terms rose just 3% in 2Q25, it skyrocketed 45% in value terms, according to the World Gold Council, driven mainly by central bank buying activity.

Central bank accumulation of gold has been motivated by a desire to diversify reserves, a trend that accelerated in 2022 after the freezing of Russia's foreign assets. In response, countries turned to gold as a hedge against geopolitical risks and sanctions, rather than for return optimization. More recently, concerns regarding global trade policy, the independence of the Federal Reserve, and rising debt burdens in the U.S. and Europe have prompted a shift away from treasury holdings and the dollar, favoring gold instead. While 2Q25 saw the lowest central bank demand for gold since 2Q22, overall demand increased, including investment in gold bars. While these factors have caused the negative relationship between interest rates and gold prices to weaken, recent market optimism for Fed rate cuts has acted as another tailwind to the precious metal. Private investors are offsetting reduced demand from central banks, with gold ETFs seeing their largest inflows in more than 3 years on Sept. 19.

Despite its rally, gold has historically not been a reliable source of long-term returns. As seen in this week's chart, the inflation-adjusted value of gold today matches its peak 45 years ago, far underperforming stocks and bonds. Gold's real value generally keeps pace with inflation, but it lacks earnings or income to fall back on if its value declines. Investors should consider more sophisticated alternatives, such as transports and infrastructure, which can both reduce portfolio risk and provide yield.

Source: JP Morgan (edited)