U.S. equities continued to push to new all-time highs this past week and closed out another strong calendar quarter. The Dow Jones and S&P 500 gained 5.7% and 8.1% in the third quarter, adding to strong year-to-date gains, while the tech-heavy Nasdaq and small cap Russell 2000 surged even higher with returns of 11.4% and 12.4%, respectively.

After three consecutive weekly gains, U.S. equities took a breather as stronger-than-expected economic data complicated the interest rate outlook. The S&P 500 slipped 0.3%, the Nasdaq declined 0.7%, and the Dow edged down 0.2%, with all three indices pulling back from record highs set earlier in the week.

Markets spent most of the week in wait-and-see mode ahead of the Fed’s September meeting, and the outcome was largely as expected: a 25 basis point rate cut. But beneath the surface, the tone is shifting.

U.S. equities pushed higher last week with support from near-term rate cut expectations following in-line inflation readings alongside sustained tech stock leadership on positive data points on AI investment trends.

Markets opened the holiday-shortened week with cautious optimism: equity benchmarks briefly hit fresh highs mid-week as investors digested a sequence of cooler-than-expected economic signals that kept the prospect of Federal Reserve rate cuts alive.