NextFin news, Global stock markets, including the Nasdaq Composite, closed at record highs on Friday, September 12, 2025, as traders positioned themselves ahead of the Federal Reserve's upcoming policy meeting scheduled for this Wednesday in Washington, D.C. The anticipation centers on the Fed's expected decision to cut interest rates amid signs of a slowing U.S. labor market and inflation data consistent with forecasts.
The Nasdaq's record close capped a week of gains fueled by optimism that the Fed will reduce rates to support economic growth. The S&P 500 and Dow Jones Industrial Average also maintained strong performances, reflecting investor confidence in the central bank's forthcoming actions.
According to data released last week, U.S. core Consumer Price Index (CPI) inflation rose 3.1% year-over-year in August, aligning with expectations and suggesting inflation pressures remain moderate. Additionally, revised labor statistics from the U.S. Bureau of Labor Statistics indicated that payroll growth over the past year was significantly lower than previously reported, signaling a weakening labor market.
Dr. Shane Oliver, Chief Economist at AMP, noted that these developments clear the way for the Fed to resume rate cuts, with markets pricing in a 0.25% reduction at the Wednesday meeting and signaling further cuts later this year and into 2026. The Fed's move aims to balance inflation control with supporting employment and economic stability.
The expected Fed rate cut has also influenced currency markets, with the Australian dollar rising above US$0.66 to its highest level since November 2024, driven by a weaker U.S. dollar and expectations of divergent monetary policies between the Federal Reserve and the Reserve Bank of Australia.
Despite the positive market momentum, analysts caution about potential near-term risks, including stretched equity valuations, uncertainties around U.S. tariffs, and geopolitical tensions. However, the prevailing market sentiment remains optimistic as investors await the Fed's official announcement this Wednesday.
Sources: AMP Economics, CNBC, Reuters, Bloomberg, Yahoo Finance.
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