09.23.25 - Markets entered today teetering between optimism and caution. Then Fed Chair Powell delivered remarks at the Greater Providence Chamber of Commerce that leaned toward caution, reminding us that the path ahead is anything but certain.
What Powell Said (and What He Didn't)
- In his speech, Powell noted that risks are "two-sided": inflation could reaccelerate, or the labor market could weaken further
- He also described equity valuations as "fairly highly valued," a reminder not to get ahead of the data
- Importantly, he didn't commit to the timing or magnitude of future rate cuts, underscoring the Fed's data-dependent stance.
Market Reaction
- According to Reuters, the S&P 500 fell about 0.6%, the Nasdaq slipped close to 0.9%, and the Dow eased modestly after Powell's remarks.
- AP reported that gold futures hit another record, a sign investors are still buying protection even as equities hover near highs.
- Treasury yields softened slightly, reflecting a more cautious rate outlook (Reuters).
What This Means for Business Owners
- Borrowing costs may stay firmer for longer. With Powell resisting strong signals of easing, financing growth or refinancing debt may remain more expensive than many expect.
- Don't lean too hard on one narrative. Growth, inflation, and caution are all competing stories in the market. The safest position often lies in flexibility, not conviction.
- Watch your balance sheet more than the benchmark. Lower rates help, but if your margins are tight, debt load heavy, or cash cushion thin, a small market shift can hurt more than a surprise rate cut helps.
- Valuations matter now more than ever. Powell flagged them; you should too. In your business and investments, focus on protecting downside before chasing upside.
What We're Watching
- Core PCE inflation (Friday, Sep. 26)
- Fed commentary on the pace of future cuts
- Credit conditions for mid-market firms