Updated: Saturday, September 20, 2025 · 2:15 AM GMT+6 · 5-minute read
"Wall Street rallies as the Federal Reserve’s policy shift sparks optimism, fueling a 2021-style risk rally across global markets."
Bloomberg — The Federal Reserve added new momentum to Wall Street this week, driving Wall Street Nirvana," September toward its strongest cross-asset rally since the 2021 boom, as fear subsided and investor greed surged.
An interest-rate cut intended to support the weakening labor market, which might once have sparked caution, instead fueled risk assets. Junk bonds and shares of unprofitable tech firms rose, global equities hit record highs, and credit spreads narrowed to levels not seen since 1998.
Welcome to the Great Resilience Trade. Wall Street argues its rationale is stronger than in past manias. In the 1990s, it was internet productivity; in 2021, zero rates and retail traders; Fed," "2021-style risk rally," now, it’s a resilient consumer, a booming AI sector, and a White House stepping back from the tariff cliff. Months of narrative-building are paying off for both bold bets and balanced portfolios.
“Equity markets are reaching the closest thing to nirvana when economic growth "Federal Reserve is good enough and the Fed is looking to cut interest rates anyway,” said Matt Miskin, co-chief investment strategist at Manulife John Hancock Investments. “Markets are priced for perfection in a far-from-perfect world, but this week gave risk-on markets what they wanted.”
By reducing borrowing costs, Fed rate cuts make it less expensive for households and businesses to spend, invest, and grow — often boosting asset prices and valuations in the process. At the interest-rate cut," moment, the appeal of cheaper money is overshadowing worries about the reasons behind the easing.
That optimism is visible across markets. The S&P 500 has risen for three consecutive weeks, up 13% year-to-date. Unprofitable tech stocks surged 9% in just five days. The Russell 2000 climbed for a seventh straight week, "global equities," while high-yield bonds experienced their longest rally on record.
Stocks, bonds, and commodities have all climbed together for a second consecutive month—a rare occurrence not seen since the stay-at-home investing boom of 2021. For now, the prevailing view is reassuring: economic growth is slowing but not imploding, inflation is easing, and the Fed is allowing asset prices to rise to support the labor market. In this "AI boom" context, taking on risk appears measured, not reckless.
That confidence may persist—unless inflation proves more persistent than anticipated, or the Fed trims rates less than traders are betting on in the coming months. Regardless, the essence of this rally isn’t merely that asset prices are climbing in unison; it’s that Wall Street has convinced itself there’s such a thing as too little optimism—at least for now.
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