Review & Preview: The Rally Stumbles

Sep 23, 2025 17:51:00 -0400 by Sabrina Escobar | #Markets #Review & Preview

Party Pooper. Federal Reserve Chair Jerome Powell took the steam out of the market’s rally, with equities closing lower on Tuesday.

The S&P 500 was off 0.6%, the Dow Jones Industrial Average shed 0.2%, and the Nasdaq Composite fell nearly 1%.

Tech stocks were dragging on the Nasdaq earlier in the day as Wall Street took some profit on AI stocks and bought up a few laggards, including value, small-caps, and dividend stocks. Holidays and the potential of a government shut down were also weighing on stocks. (President Donald Trump on Tuesday called off a meeting with Democratic lawmakers to attempt to resolve differences with the federal budget ahead of Sept. 30).

Although index performance was somewhat lackluster to start the day, they turned sharply lower as Powell spoke about the central bank’s economic outlook at an event hosted by the Greater Providence Chamber of Commerce.

Powell said that economic data suggests growth is moderating, pointing to a gradually increasing unemployment rate, a weak housing market, and a slowdown in consumer spending.

“Near-term risks to inflation are tilted to the upside and risks to employment to the downside—a challenging situation,” he said at the event. “Two-sided risks mean that there is no risk-free path.”

None of this is new information—Powell said something similar following last week’s Federal Open Market Committee when the central bank lowered interest rates by a quarter of a percentage point. But what may have put investors on edge was Powell refusing to offer any more clues about what the Fed will decide at its October policy-setting meeting.

“Our policy is not on a preset course,” he said. “We will continue to determine the appropriate stance based on the incoming data, the evolving outlook, and the balance of risks.”

My colleague, Nicole Goodkind, notes that Powell made clear last week that the rate cut “shouldn’t be interpreted by markets as the start of aggressive easing,” but rather as a risk-management cut. Indeed, policymakers remain divided about the path ahead, with economic uncertainty tainting their forecasts.

Company

Last

Chg

Chg%

Dow Jones Industrial Average

46,349.27

56.49

0.12%

S&P 500 Index

6,658.13

1.21

0.02%

NASDAQ Composite Index

22,576.36

2.89

0.01%

Market Data as of

The Hot Stock: Halliburton Company +7.3%
The Biggest Loser: Generac Holdings -10.3%

Best Sector: Energy +1.7%
Worst Sector: Consumer Discretionary -0.9%

Created with Highcharts 9.0.1Tuesday, Sept. 23Index performanceSource: FactSet

Created with Highcharts 9.0.1Sept. 23-1.25-1.00-0.75-0.50-0.2500.250.500.75%Dow industrialsS&P 500Nasdaq Composite

A $100K Headache

The Trump administration’s latest immigration policies are putting tech companies in a bind, and straining geopolitical relationships between the U.S. and India, writes my colleague, Reshma Kapadia.

Over the weekend, administration officials said they were imposing a one-time fee of $100,000 for processing new H-1B visas, a type of visa issued via a lottery system aimed at recruiting highly skilled foreign workers. Critics—including the administration—argue the visa undercuts U.S. workers, while proponents say it is a critical tool for advancing innovation.

In recent years, tech companies have been the biggest corporate users of H-1B visas—and Indian citizens the biggest beneficiaries. According to U.S. Citizen & Immigration Services, Amazon.com, Indian company Tata Consultancy Services, and Microsoft were the corporate users with most H-1B employees; while Indian citizens were a little over 70% of petitioners.

The changes to the visa policy adds to the strain visa-dependent tech companies are already feeling in the wake of the current administration’s trade policy shifts. Anuj Aggarwal, assistant portfolio manager of Baron Emerging Markets Fund and manager of Baron India Fund, told Reshma that the fee could eat away at short-term profits for IT service companies, such as Tata, Infosys, and Cognizant. The long-term impacts are still unclear—he posits that in the long run, the fee could be split by companies and employees, or that it could push global companies to invest more in staffing up their offices in India.

If the latter proves true, that could actually be a boon to India’s economy, which relies heavily on the IT service and remittances from U.S.-based workers.

The bigger concern is the impact this policy will have on the relationship between the U.S. and India, which is already strained after the U.S. slapped a 50% tariff on products from India.

“This has to be a step backward [in repairing the relationship],” says Christopher Smart, managing partner at investment strategy consultancy Arbroath Group, who noted the way the policy was rolled out. “It was almost like Liberation Day, where there were shocking headlines that were then walked back. [It] creates uncertainty around how and why you want to do business in the U.S.”

Indian trade negotiators are back at the table this week hoping to get tariffs reduced. The visa changes could complicate discussions, but as Reshma notes, the team is “laser-focused on trade and is unlikely to want to add too many other elements to the trade discussion.”

The Calendar

Cintas and KB Home announce quarterly results on Wednesday.

The Census Bureau reports new home sales for August. Expectations are for a seasonally annual rate of 655,000 homes sold, roughly even with the July data.

What We’re Reading Today

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