Market Wrap | Fed's Tightening Signals Boost US Stocks Utilities and Tech Lead Gains

On September 22, 2025, the U.S. stock market saw gains across major indices, with the S&P 500 rising 0.44%, the Dow Jones Industrial Average up 0.14%, and the Nasdaq Composite increasing 0.70%. This positive performance comes amidst significant macroeconomic developments. The Federal Reserve's overnight reverse repurchase agreement usage surged to $14.173 billion, signaling tighter liquidity conditions. Additionally, Fed Governor Milan noted that the current federal funds rate is highly restrictive, suggesting an appropriate level around 2% to 2.5% and hinting at potential future rate adjustments. These monetary policy discussions and actions are influencing market sentiment, contributing to the day's gains.

Based on the day's market performance, the utilities and technology sectors outperformed the S&P 500. Specifically, the utilities and technology sectors showed strong performance. Conversely, the healthcare, energy, communication services, materials, financials, and consumer staples sectors moved in the opposite direction of the S&P 500.

The Federal Reserve's overnight reverse repurchase agreement usage increased to $14.173 billion, indicating a potential shift in liquidity management. Fed Governor Milan commented on interest rate adjustments, suggesting a series of 50 basis point cuts to align policy with neutral levels, and foreseeing smaller cuts in 2026 and 2027. Additionally, Milan highlighted the current federal funds rate as very restrictive, advocating for a rate between 2% and 2.5% while maintaining a focus on stabilizing inflation at 2%. Nvidia's investment in OpenAI, amounting to up to $100 billion, marks a significant partnership, with plans to deploy Nvidia systems by 2026. This move is likely to influence the tech sector, given Nvidia's role in AI advancement.