U.S. stocks finished the week on a high note Friday, September 26, 2025, as investors digested a fresh batch of economic data and the latest political maneuvers out of Washington. According to the Associated Press, the S&P 500 climbed 0.6% and snapped a three-day losing streak, while the Dow Jones Industrial Average surged 299 points, or 0.7%. The Nasdaq composite added 0.4%. All three major indexes edged closer to their all-time highs set earlier in the week, a sign that Wall Street’s optimism hasn’t faded—even as inflation remains stubbornly above the Federal Reserve’s target.
The day’s rally was sparked by a government report showing that inflation, as measured by the Fed’s preferred price gauge, ticked up to 2.7% in August from 2.6% in July. That’s still well above the central bank’s 2% goal and, as the Associated Press put it, "more painful than any household would like." But crucially, the number was exactly what economists had predicted. In a market that’s been running hot on hopes for interest rate cuts, a lack of nasty surprises was enough to put traders in a buying mood.
“The market and broader macroeconomic effects of a shutdown, even lengthy ones, are often mere blips on the charts,” Brian Jacobsen, chief economist at Annex Wealth Management, told the AP, referencing the looming threat of a U.S. government shutdown next week. Investors, it seems, have grown accustomed to political brinkmanship and are betting that the stock market will weather any short-term turbulence.
Meanwhile, President Donald Trump injected a new element of uncertainty late Thursday by announcing a fresh round of tariffs. Beginning October 1, 2025, imports of certain pharmaceutical drugs, kitchen cabinets, bathroom vanities, upholstered furniture, and heavy trucks will face new taxes. As is often the case with Trump’s pronouncements on his social media network, details were scant, leaving analysts unsure about the ultimate economic impact. Still, the announcement sent ripples—rather than waves—through the market.
Some companies responded swiftly. Paccar, the Bellevue, Washington-based maker of Peterbilt and Kenworth trucks, saw its shares jump 5.2% (or 4.9%, depending on the time of day), as investors bet the company could benefit or at least weather the new tariffs. Pharmaceutical giants Eli Lilly and Pfizer also nudged higher, rising 1.4% and 0.7% respectively in some reports (or 1.5% and 1% in others). The home furnishings sector, however, was more volatile. Williams-Sonoma’s stock swung between losses and gains, ultimately eking out a 0.1% rise, while RH (formerly Restoration Hardware) dropped as much as 4.2% (or 3.5%).
Not all the news was rosy. Costco Wholesale fell 2.9% after reporting a quarterly profit that beat analysts’ forecasts. The culprit? Renewal rates for its popular memberships slowed slightly, and a key measure of in-store revenue growth missed expectations. Investors, always forward-looking, seemed more concerned about future momentum than past performance.
By the closing bell, the S&P 500 stood at 6,643.70, up 38.98 points. The Dow Jones Industrial Average settled at 46,247.29, gaining 299.97 points, and the Nasdaq composite closed at 22,484.07, up 99.37 points. These gains helped the major indexes recover ground lost earlier in the week, reinforcing the narrative that Wall Street remains resilient in the face of mixed economic signals.
Globally, markets painted a more varied picture. European stocks rebounded, with France’s CAC 40 climbing 1%. But in Asia, the mood was glum. South Korea’s Kospi tumbled 2.5%, Japan’s Nikkei 225 fell 0.9%, and pharmaceutical heavyweights like Sumitomo Pharma and Chugai Pharmaceutical sank 3.5% and 4.8%, respectively. The divergence underscored the different economic headwinds facing each region.
In the bond market, the yield on the 10-year U.S. Treasury note held steady at 4.18%, reflecting a wait-and-see attitude among fixed-income investors. The stability in yields suggests that, for now, concerns about runaway inflation or aggressive rate hikes have been put on the back burner.
Yet beneath the surface, some warning signs persist. The University of Michigan’s latest consumer sentiment survey revealed that Americans remain frustrated with high prices. Expectations for inflation over the next 12 months dipped slightly, from 4.8% to 4.7%, but that’s still well above the Fed’s comfort zone. Interestingly, the survey found a split between the haves and have-nots: sentiment in September held steady among Americans with large stock portfolios—who have benefited handsomely from Wall Street’s record run—even as it declined among households with smaller or no equity holdings. As the AP reported, "Sentiment for them held steady in September, while falling for households with smaller or no stock investments."
All eyes are now on Washington, where the prospect of a government shutdown looms. The deadline is set for the week following September 27, 2025, and while investors have seen this movie before, there’s always a chance for last-minute surprises. Historically, such shutdowns have had limited impact on the broader market, but with political polarization at a high, nothing is being taken for granted.
For now, the story of the U.S. stock market remains one of cautious optimism. The Federal Reserve delivered its first rate cut of the year last week, and while officials have penciled in more reductions through next year, Chair Jerome Powell has warned that plans may have to change quickly if inflation doesn’t cooperate. The delicate balance between supporting growth and keeping prices in check is likely to define the economic narrative for months to come.
As for the new tariffs, their ultimate effect remains to be seen. With details still emerging, analysts and investors will be watching closely to see which sectors are hit hardest and which—like Paccar—manage to turn adversity into opportunity. The interplay between monetary policy, trade tensions, and consumer sentiment will continue to shape the market’s trajectory as autumn unfolds.
In a week marked by twists and turns, Wall Street’s resilience stood out. Whether that optimism holds will depend on the next round of data, decisions, and, perhaps, a little luck.