Why Solid GDP Can’t Stop US Stocks from Falling

The market’s recent performance on Thursday, September 25, 2025, confirmed a growing unease among investors. All three major US indices—the Dow Jones Industrial Average, the Nasdaq Composite, and the S&P 500—closed in the red for a third consecutive session. This broad-based weakness was driven by a confluence of factors, moving beyond the simple “good news is bad news” paradox. The market is now grappling with a more fundamental question: is the recent bull run, particularly in the tech sector, built on hype rather than sustainable growth?

A prime example of this shift in sentiment is the sharp pullback in Oracle stock. After being a major driver of the AI rally, the company’s shares slid 5% on Thursday and are now down nearly 16% from their recent high. This decline reflects increasing scrutiny over whether the massive investments and partnership announcements in the AI space will actually translate into tangible revenue. The market appears to be differentiating between speculative excitement and genuine, profitable business models.

Furthermore, a jump in Treasury yields added to the selling pressure. This was triggered by a stronger-than-expected jobless claims report and an upward revision of the second-quarter GDP to 3.8%. This seemingly positive economic data, which would typically be a sign of strength, is now being interpreted as a potential reason for the Federal Reserve to reconsider its pace of rate cuts, undermining a key catalyst for the stock market’s recent gains.

Finally, political risks are also weighing on investor confidence. The ongoing debate over a potential government shutdown, as Congress struggles to agree on a funding solution, adds a layer of uncertainty. This political headwind, combined with the doubts over corporate fundamentals and the potential for a less accommodating monetary policy, contributed to the widespread decline across the major indices.