ASX set to retreat, Wall Street slips; Fed chief stays cautious on rate cuts

2 hours ago 1

By Stan Choe

September 24, 2025 — 5.23am

US stock indexes are slipping as Wall Street takes a moment following a relentless rally.

The S&P 500 fell 0.6 per cent. The Dow Jones was down 89 points, or 0.2 per cent, in mid-afternoon trade, and the Nasdaq composite was 1 per cent lower. The Australian sharemarket is set to slip, with futures at 5.06am AEST pointing to a loss of 35 points, or 0.4 per cent, at the open. The ASX added 0.4 per cent on Tuesday. The Australian dollar was fetching US65.94¢ at 5.20am AEST.

Wall Street is counting on more rate cuts this year.

Nvidia weighed on the market after giving back some of its big gain from the day before, when it announced a partnership with OpenAI to build out data centres. Wall Street’s most influential stock lost 3.2 per cent.

It’s a breather for the indexes, which all set their latest all-time highs on Monday. After surging from a bottom in April, the broad US stock market is facing criticism that it’s shot too high, too fast and become too expensive. Even the head of the Federal Reserve, Jerome Powell, said on Tuesday that stock prices broadly look “fairly highly valued.”

Powell also signalled a cautious approach to future interest rate cuts, in sharp contrast with other Fed officials this week who have called for a more urgent approach.

In remarks in Providence, Rhode Island, Powell noted that there are risks to both of the Fed’s goals of seeking maximum employment and stable prices. But with the unemployment rate rising, he noted, the Fed agreed to cut its key rate last week. Yet he did not signal any further cuts on the horizon.

If the Fed were to cut rates “too aggressively,” Powell said, “we could leave the inflation job unfinished and need to reverse course later” and raise rates. But if the Fed keeps its rate too high for too long, “the labour market could soften unnecessarily,” he added.

He also addressed the tense political environment surrounding the Fed during a question and answer session following his speech, and denied accusations the central bank has acted politically in its policy decisions.

“We’re looking at what’s the best thing for the people that we serve,” he said. “Truth is mostly people who are calling us political — it’s just a cheap shot.”

President Donald Trump — in addition to pressuring the Fed for lower interest rates — has been among Republicans who have accused Powell of making rate decisions that favoured Democrats.

Elsewhere on Wall Street, AutoZone fell 0.7 per cent after reporting a weaker profit for the latest quarter than analysts expected, as the auto parts retailer squeezed less earnings out of each $US1 of revenue than it did a year earlier.

But a 1.7 per cent rise for Boeing helped limit the market’s losses after Uzbekistan Airways agreed to buy 14 of its Dreamliner airplanes and said it may add eight more to the order.

Kenvue climbed 2.2 per cent and recovered much of its drop from Monday, when it had sunk on worries that President Donald Trump would say its Tylenol product may increase the risk of autism in children. Trump did warn pregnant women about taking Tylenol, but he did not seem to cite any significant new research to back it up. Kenvue has disputed any link between the drug and autism.

Gold, meanwhile, continued its record-breaking rally and topped $3,800 per ounce. It’s soared nearly 45 per cent so far this year, even more than the US stock market, in part on expectations that the Fed will cut interest rates to help the slowing US job market.

Worries about potentially high inflation because of White House influence on the Fed, along with mountains of debt for the US and other governments, have also vaulted gold’s price higher.

Federal Reserve chair Jerome Powell reiterated that the central bank will take a measured approach to cutting rates despite pressure from the Trump White House.

Powell said again on Tuesday that the Fed is stuck in an unusual position because worries about the job market are rising at the same time that inflation has stubbornly remained above its 2 per cent target.

An update on Friday will show how much prices are rising for US households based on the Fed’s preferred measure of inflation, and economists expect it to show a slight acceleration for last month.

A preliminary report suggested activity at US businesses is still growing, but at a slower pace as tariffs raise prices for them. Companies may be finding it difficult to pass those higher costs fully on to customers because of “weaker demand and stiff competition,” according to S&P Global.

The numbers suggest that inflation could moderate for US households, but not by so much that it drops below the Fed’s 2 per cent target in the coming months, according to Chris Williamson, chief business economist at S&P Global Market Intelligence.

In the bond market, Treasury yields ticked lower. The yield on the 10-year Treasury eased to 4.11 per cent from 4.15 per cent late Monday.

In stock markets abroad, indexes were mixed amid modest moves across much of Europe and Asia.

France’s CAC 40 rose 0.5 per cent, and Hong Kong’s Hang Seng fell 0.7 per cent for two of the bigger moves. Japan’s stock market was closed for a national holiday.

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