Market wrap
week: S&P500: -0.1% FTSE100: +0.2% Gold: +37.8%
ytd: S&P500: +10.4% FTSE100: +11.5% Gold: +4.9%
S&P 500 Hits New Highs Before Jobs Data Sparks Pullback
Source: Connect Weekly | Week ending September 6, 2025
US equities started September on a volatile footing as bond yields jumped and AI favourites came under heavy pressure. Still, a midweek rebound led by Alphabet and Apple helped propel the S&P 500 to fresh record highs before Friday’s softer jobs data revived rate-cut hopes - only for optimism to fade by the close. The S&P 500 ended the week marginally lower, while the Nasdaq 100 and Russell 2000 both outperformed.
What drove markets this week?
Tuesday’s broad selloff saw the AI trade buckle, with Nvidia down 2% and a Morgan Stanley basket of AI beneficiaries suffering its steepest two-day slide since April. Ulta was a rare bright spot, rallying over 8% on strong earnings. By Wednesday, just two stocks, Alphabet (+9.1%) and Apple (+3.8%) were enough to lift the S&P 500 into positive territory after a favourable court ruling and fresh AI integration news. The rally broadened Thursday, with cyclicals leading and American Eagle surging nearly 40% on blowout earnings. But Friday’s weaker jobs report failed to sustain momentum: markets initially priced in a September Fed cut as a near-certainty, only for equities to slip into the red by the close.
AI momentum shifts
The week highlighted how concentrated US equity leadership remains. Nvidia’s dip underscored fragility in the AI trade, while Amazon’s unveiling of a new agentic AI tool showed competition heating up. The result was a market where a handful of mega-caps for better or worse continued to dictate index-level performance.
UK political strains resurface
In the UK, Deputy PM Angela Rayner resigned after revelations of underpaid stamp duty on a property purchase. The scandal deepens divisions within Labour at a time when Chancellor Rachel Reeves is preparing a challenging autumn budget.
Gold breaks out
Gold prices surged through previous resistance levels this week, hitting fresh all-time highs as investors sought havens amid rising bond yields and shifting Fed expectations. Friday’s soft jobs report added fuel to the rally, with markets betting that policy easing is now a question of when, not if. The move highlights how bullion continues to benefit from both macro uncertainty and diversification flows as equity leadership narrows.
Looking ahead
The focus now shifts to next week’s inflation data, with both CPI on and PPI due to be released. a 25bps rate cut is all but assured but on the back of jobs numbers the chance of a 50bp September cut is becoming possible. The market will be looking for confirmation that inflation is trending lower though before the Fed meets later this month.
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