Mag 7 Tumbled After Fed Chair Powell Spoken!

JC888
10-01

On 23 Sep 2025, Fed chair Jerome Powell spoke for the first time, at the Greater Providence Chamber of Commerce 2025 Economic Outlook Luncheon in Warwick, Rhode Island, after US central bank interest cut on 17 Sep 2025.

His was 1 of 16 speaking events that Fed members are undertaking, over 5 days last week.

Powell’s Address.

His speech covered topics that everyone is eager to find out.

(1) Current Situation.

  • US economy is facing “stormy seas & powerful crosswinds,” with inflation still “somewhat elevated” and recent tariffs pushing goods prices higher.

  • Job growth has averaged about 25,000 per month over the last three months, which Powell noted is “below the breakeven rate” for keeping US unemployment rate steady.

  • Unemployment is rising, but job market indicators are still “broadly stable” and not showing major layoffs yet.

  • Powell mentioned Americans are living through what can be described as “light stagflation,” a period of slow growth, higher prices, and low but rising unemployment.

(2) Federal Reserves Actions

  • The Federal Reserve cut interest rates by -0.25 percentage points, lowering the target to 4%-4.25%. which Powell regarded the stance “modestly restrictive”.

  • This was done as part of “risk management” to “shift the balance more toward neutral,” given the increased downside risks to jobs.

  • US labour market, while slowing, is still a key focus, and the Fed is cautious to balance inflation control with supporting job growth.

  • Powell warns “there is no risk-free path,” and that actions are not “on a preset course”.

  • The Fed will keep responding to incoming data and evolving outlook.

(3) Why Fed Made These Decisions ?

  • Powell highlighted: “If we ease too aggressively, we could leave the inflation job unfinished and need to reverse course later.”

  • He said this could risk inflation rising to 3.5% or 4% again.

  • Waiting too long to cut rates could cause US labour market to “soften unnecessarily”, so the Fed is striving to balance both sides of its “dual mandate”.

  • He called the policy environment “challenging,” with near-term risks to inflation “tilted to the upside” and risks to employment “tilted to the downside”.

Speeches Aftermath.

US market has taken a beating after Mr Powell’s speech.

This is because apart from a weakening US economy, Mr Powell has briefly touched on the state of the US stock market.

He commented that US stock prices are fairly “highly valued” and “quite elevated by many metrics”.

He acknowledged that major equity indexes have hit record highs, and that the Fed monitors overall financial conditions, including asset prices, to ensure its policies align with its objectives.

Like it or not, it has spooked US market, coupled with the fact that on the run up to inflation numbers release on Fri, 26 Sep 2025, US market has a tendency to self-correct itself. (see below)

As of 25 Sep 2025 closing

For the whole of last week, the 3 US composite indexes have :

  • Dow Jones : +0.09% (+40.60 to 46,247.29).

  • S&P 500 : -0.16% (-10.58 to 6,643.70).

  • Nasdaq : -0.54% (-122.52 to 22,484.07).

Main Culprits ?

As of 26 Aug 2025, the combined market capitalization of the Magnificent 7 stocks makes up more than 30% of the total market value of all 500 companies in the S&P 500 index.

This extremely high level of concentration means their price movements have a disproportionate impact on the direction of the S&P 500.

After Mr Powell’s speech on 24 Sep 2025, all Magnificent 7 stocks experienced a decline, reacting (a) not just to Powell's speech but also (b) broader US market context and recent policy moves.

The selloff erased earlier gains despite enthusiasm after the first Fed funds rate cut in 2025.

Mag 7’s Rise & Fall.

From 2025 Sep 24 - 26, each Mag 7’s stock movement is as follows: (see below)

Surprisingly, there was only one bright spark - TSLA.

Factors Affecting Mag 7.

Below are factors affecting the Mag 7, that affected the S&P 500 in the process.

(1) General tech sell-off; AI spend debate.

  • A broad risk-off move in the technology sector dragged down the Magnificent 7 as investors rotated out of high-growth names into safer assets.

  • Rising Treasury yields and sector-wide de-risking amplified selling pressure across mega-cap tech stocks. (see below)

  • Despite FOMC’s announcement of an interest cut on 17 Sep 2025, US 10 years Treasury rate rose consistently from 4.06% to 4.20% on Fri, 26 Sep 2025.

  • It is an abnormally.

(2) Overextended valuations; profit taking.

  • After weeks of gains, valuations looked stretched, leading investors to lock in profits on mega-cap names.

  • This technical correction added downside momentum as traders scaled back exposure.

(3) Macro uncertainty.

Fresh US tariff implementations by Trump revived fears of global trade tensions that could hurt supply chains and tech demand - all over again. (see below)

  • On 25 Sep 2025, the madcap president announced the 100% tariff on branded or patented pharmaceutical drugs, kitchen cabinets, and furniture.

  • These measures set to take effect on 01 Oct 2025.

  • The Magnificent 7, heavily exposed to global markets, were prime targets of this investor caution.

(4) Valuation concerns; weaker sales outlook.

  • Soft sales guidance from parts of the tech sector raised doubts about sustained revenue growth.

  • The renewed focus on fundamentals, further pressured the richly valued mega-cap stocks.

With PCE inflation numbers coming in as per estimates, will US market will continue to consolidate or stage a recovery next week as September merges into October. To be seen !

Remember to check out my other posts. (See below). Help to Repost ok, Thanks.

Must Read: Click on below titles to access. Repost to share, Like as encouragement ok. Thanks.

  • Do you think US economy is weakening month by month ?

  • Do you think a weaker US economy will affect US stock market or it will not ?

If you find this post interesting, give it wings! ️ Repost and share the insights ?

Do consider “Follow me” and get firsthand read of my daily new post. Thank you.

@Daily_Discussion

@TigerPM

@TigerStars

@Tiger_SG

@TigerEvents

# 💰Stocks to watch today?(5 Dec)

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

Report

Comment（14）

  • Top
  • Latest