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Markets Weekly: Fed Caution Weighs, Europe Flat, Asia Mixed
Global stocks delivered a mixed week as cautious signals from the Federal Reserve weighed on sentiment.
In the US, the Nasdaq slipped 0.54%, the Russell 2000 posted its first loss since early August, and the S&P 500 edged lower, while the Dow was flat.
Energy shares bucked the trend, rising alongside oil after President Trump called on Europe to end Russian imports. Inflation held steady in August at 2.9% year-on-year on the Fed’s preferred PCE index, while Q2 GDP was revised up to 3.8% thanks to stronger consumer spending.
Business surveys showed activity still expanding, though at a slower pace, and housing surprised on the upside with new home sales hitting their highest level since early 2022.
In Europe, markets were little changed as eurozone growth reached a 16-month high but confidence weakened in Germany and the UK. Sweden cut rates again, while Switzerland held steady.
Japan’s Nikkei lost 0.7% as softer Tokyo inflation eased rate hike bets, though the yen weakened toward 150 per dollar. Meanwhile, Chinese shares rose modestly on strong domestic liquidity and optimism around AI, even as the Hang Seng retreated in Hong Kong.
Stock market closing data for the week of Sep 22 to Sep 26, 2025
News Summaries
Big Tech’s AI Spending Turns Into Market Windfalls
It appears that investors are rewarding artificial intelligence bets with outsized gains. Companies that announce billions in AI investments are seeing their market value rise by multiples of that spending.
Nvidia (NSQ: NVDA) is the standout. After unveiling a $5 billion stake in Intel and a plan to put $100 billion into OpenAI, the chipmaker gained over $320 billion in market value in last week. Alibaba, too, surged nearly 10% this week, adding $35 billion in value after promising to spend more than its already-lofty $50 billion AI target.
The same playbook is boosting the biggest names in tech. Meta (NSQ: META), Microsoft (NSQ: MSFT), Alphabet (NSQ: GOOGL) and Amazon (NSQ: AMZN) have committed over $317 billion to AI this year, but their combined market value has expanded by $1.8 trillion. Oracle has more than doubled as investors cheer its AI partnerships and plans to pour tens of billions into data centers.
The frenzy has sparked warnings. Some strategists call the behavior bubble-like, noting that Nvidia’s $4.3 trillion size makes every price move disproportionately large. Others point to the risk of market concentration, with a handful of stocks now driving most of the S&P 500’s gains.
Still, the mood is clear: on Wall Street, under-investing in AI is seen as more dangerous than over-spending. For now, the promise of AI scale and infrastructure outweighs the fear of excess.
Instagram Crosses 3 Billion Users, Bets on Reels and Messaging
Instagram has hit 3 billion monthly users, making it one of the most widely used apps ever. Parent company Meta is now doubling down on the features that drive the most engagement: private messaging and short-form video.
The app is redesigning its home screen to highlight Reels and direct messages. In India and South Korea, Instagram will test opening straight into Reels instead of the traditional feed, a move that could expand globally if feedback is strong. India is a particular focus, as TikTok remains banned there, leaving Instagram with an open runway for growth.
More than half of all time spent on Instagram already comes from video, and most of that content is recommended from outside users’ own networks. To refine the experience, Instagram will soon allow people to type in topics they want to see more often, such as hobbies or sports teams, giving them greater control over the algorithm.
Despite its scale, Instagram still faces risks. A looming U.S. court ruling could force Meta to spin off the app if regulators succeed in their monopoly case. Internally, leaders like Adam Mosseri admit the challenge is not just about growth but about cultural relevance making sure Instagram remains where new trends and conversations are born.
German Auto Industry Faces Deep Cuts
Germany’s car sector is shrinking fast as Volkswagen and Bosch scale back. Bosch will eliminate 13,000 jobs worldwide, while Volkswagen is pausing production and reducing staff at EV plants. In total, the auto industry has shed about 55,000 positions in the past two years, and nearly 100,000 are projected to disappear by 2030.
The causes are piling up: weak demand for electric vehicles, rising labor and energy costs, and fierce competition from Chinese manufacturers like BYD. Trump’s new U.S. tariffs on heavy trucks have also hurt Daimler and VW’s Traton. Suppliers including Continental, Schaeffler and ZF Friedrichshafen are cutting back as they face price pressure from automakers and cheaper Asian parts.
The consequences reach beyond cars. The German economy is expected to grow just 0.2% this year, and high costs are prompting companies to consider moving investments abroad. Economists warn that the layoffs mark the start of a larger industrial restructuring, with risks of bankruptcies and long-term damage to Germany’s manufacturing base.
For Bosch, the cuts hit hardest in Stuttgart, the historic heart of German engineering. The news has reignited debate over Europe’s 2035 combustion engine ban, with state leaders calling it “five past midnight” for the auto sector. The shift to EVs is proving slower and more painful than expected, and Germany’s industrial model is under strain.
From the World of Crypto
Coinbase CEO Sees $1M Bitcoin by 2030
Coinbase’s Brian Armstrong believes Bitcoin could reach $1 million per coin by the end of the decade, provided U.S. policymakers resist pressure from big banks. He called the ongoing regulatory push in Washington “historic,” pointing to the Genius Act on stablecoins and the Clarity Act for broader crypto assets as foundation stones for U.S. crypto leadership.
Armstrong credits recent progress from ETF approvals to government Bitcoin reserves as demand drivers. But he warns banks are lobbying to block crypto-linked rewards programs, which threaten their grip on credit card rewards and swipe fees. He likens these perks to airline miles or credit card points, arguing that banning them would only protect incumbents from competition.
For Armstrong, the battle over rewards reflects the larger fight between legacy banking networks and open crypto rails. Stablecoins and Bitcoin payments offer instant settlement and lower costs, while banks rely on closed systems.
Coinbase’s vision extends beyond being a trading platform. Armstrong describes the company as building a financial “super app” with custody, payments, savings, and Bitcoin-denominated rewards, a replacement for traditional banks. He insists that the transition is inevitable, and that crypto will become the backbone of a new financial infrastructure.
Key headlines of the week
Costco Beats on Profit | Earnings of $5.87 a share topped estimates, with sales boosted by shoppers sticking to essentials. Costco is consolidating buying and sourcing locally to counter tariffs, and its holiday mix will lean toward necessities.
Chinese Tech Stocks Surge | Alibaba is up 146% this year, Baidu 62%, Tencent 56%. The rally followed DeepSeek’s AI breakthrough and Beijing’s push for chip self-sufficiency. With policy support back, China’s AI chips and models are gaining global credibility.
Nvidia’s $100B Loop Deal | Nvidia will invest $100B in OpenAI, which will use the money to buy Nvidia’s chips. The circular bet added $180B to Nvidia’s value in one day, raising the question: genius flywheel or market froth?
