Market Wrap | Federal Reserve Rate Cut Debate Intensifies Amid Political Pressure

On September 4, 2025, the S&P 500 Index rose by 0.83%, the Dow Jones Industrial Average increased by 0.77%, and the Nasdaq Composite Index gained 0.98%. As the Federal Reserve's September meeting approaches, its policy remains a key focus. With a 97.6% probability of a rate cut, internal divisions between dovish and hawkish members highlight the ongoing debate over inflation risks. Additionally, concerns about the Fed's independence are growing, as political influences may impact monetary policy and investor confidence.

Today, the non-essential consumer goods sector, communication services sector, industrial sector, and financial sector outperformed the S&P 500. Notably, the non-essential consumer goods sector demonstrated exceptional performance. Conversely, the utilities sector moved in the opposite direction of the S&P 500.

The Federal Reserve's upcoming September meeting is expected to showcase significant internal divisions, with some members advocating for rate cuts due to inflation concerns. Recent reports indicate a high probability of a rate cut during the meeting. This potential shift in monetary policy has heightened investor concerns over the Fed's independence, especially with recent political influences. Additionally, Goldman Sachs warns that a loss of credibility in the Federal Reserve could lead to a significant rise in gold prices as investors seek alternative value stores. Meanwhile, Nvidia faces growing competition in the AI chip market, with Google leveraging its Tensor Processing Units, contributing to possible short-term challenges for Nvidia despite a positive long-term outlook.