Tuesday, October 7, 2025
Markets took a breather in this latest bull run in the markets, with red closes among all major indexes snapping a seven-day winning streak on the S&P 500. The Dow slid -91 points, -0.20%, the S&P 500 -25, -0.38%, the Nasdaq -155, -0.68%, and the small-cap Russell 2000 -25, -1.02%. Bond yields retreated as well, with the 10-year at 4.13% and the 2-year down to 3.57%.
We here at “Ahead of Wall Street” will try to refrain from patting ourselves on the back, but with pre-markets in the green we openly questioned this morning whether we can trust the AI trade to continually catapult market indexes to new all-time highs after new all-time highs. Now Wall Street considers to what extent we may be inside an AI-trade “bubble,” and to what extent these growing multiples are justified.
Gold prices today tiptoed over the $4K line for the first-time ever, after stepping up to the line a few times in recent trading days. Spot gold prices rose another +0.76% today to $3981 per troy ounce. We tend to look at gold-buying as a hedge against potential froth in the equities market, which becomes common when we see things like the S&P 500 close at new all-time highs for a week straight.
August Consumer Credit Hits the Brakes
Following an advancement of
Consumer Credit of $16.0 billion a month ago and expectations of another $14.0 million in today’s August report, we saw a big drawback to $363 million. Analysts cite deteriorating credit quality, raising credit card balances and increased delinquencies as the reason for the pullback. Revolving Credit marked its third decline of the year, with Revolving Debt sinking -5.5% year over year.
This is another set of data pointing to a softening of the U.S. economy, joining a somewhat unraveling labor market that nevertheless does not see an historically high rate of job layoffs, but shows vastly dwindling employment opportunities. This, combined with creeping costs based on inflation levels beginning to assert themselves, is helping lead to things like Consumer Credit pulling notably back.
What to Expect from the Stock Market Tomorrow
We had no major economic reports scheduled for release for Wednesday, and with the government shutdown we were already assured of not getting any new data anyway. Fed Governor Michael Bar and Fed Presidents Austan Goolsbee (Chicago), Neel Kashkari (Minneapolis) and Alberto Musalem (St Louis) will all make appearances, before and after the Fed minutes from the September Federal Open Market Committee (FOMC) meeting, which saw the first rate cut since December of last year.
We already know every voting member but one sought a 25 basis-point (bps) cut at the meeting, bringing the Fed funds rate to 4.00-4.25% for the first time in three years. That one outlier was President Trump’s Chair of Economic Advisors Stephen Miran, who has openly advocated — as Trump has — for drastically lowered interest rates. Miran’s vote was for a 50 bps cut last month.
The next FOMC meeting comes Halloween Week, and although the dot-plot for the Fed suggests another 25 bps cut is forthcoming, this becomes a bit more problematic with no government reports on inflation, jobs and other economic metrics due to the government shutdown. What the September minutes will hopefully show is the overall vibe among the FOMC in continuing to take rates down, whether on the hawkish side or more dovish.
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