September 18th, 2025
Stocks Dip Ahead of Fed Decision
U.S. equities opened modestly lower Wednesday as investors await the Federal Reserve’s policy announcement this afternoon, where a 25-basis-point (0.25%) rate cut is widely expected.
Defensive sectors such as consumer staples and utilities are outperforming, while technology and consumer discretionary lag, signaling a cautious tone.
The Dow Jones Industrial Average moved up 0.7%, while the S&P 500 flipped between negative and positive territory. Meanwhile, the tech-heavy Nasdaq Composite fell 0.5%.
Overseas, European markets are higher—led by tech stocks—after major U.S. technology firms unveiled new U.K. investments during President Trump’s visit.
Economic Takeaways:
- Bond yields are slipping, with the 10-year U.S. Treasury yield at 4.02%.
- The U.S. dollar is strengthening against major currencies.
- WTI crude trades lower after recent gains tied to Ukrainian drone strikes on Russian oil facilities.
- In trading yesterday, most S&P 500 sectors clustered around unchanged, with five of 11 higher, led by energy and consumer discretionary after a strong retail sales report.
- From a technical perspective, with the market near record highs, clear resistance levels are harder to define. Still, the S&P 500 may encounter resistance near 6,650, with potential for a break below 6,500 if the Federal Reserve adopts a hawkish tone.
- August housing starts dropped 8.5% month over month to a seasonally adjusted annual rate of 1.307 million units, missing the Briefing.com consensus of 1.375 million. Building permits also fell 3.7% to 1.312 million, below expectations of 1.37 million.
- The S&P 500 continues to trade at a historically elevated valuation near 23 times projected 12-month forward earnings. While such multiples are not reliable for short-term market timing, they tend to be more informative for gauging long-term return potential.
- Volatility remains subdued with the Cboe Volatility Index (VIX) below 16, but the VIX curve is historically steep—indicating that short-term options pricing is depressed compared with longer-dated contracts.
Fed Poised for First Rate Cut of 2025
Yahoo Finance’s Jennifer Schonberger reports that the Federal Reserve is widely expected to lower its benchmark interest rate by a quarter percentage point on Wednesday afternoon, while offering fresh guidance on how many additional cuts could follow before year-end.
Markets are pricing in a 25-basis-point reduction—the first of 2025—along with expectations for similar-sized cuts at the Fed’s remaining policy meetings in late October and early December.
How far the Fed plans to go will be revealed in its updated “dot plot,” the quarterly chart showing each policymaker’s projection for the path of the federal funds rate. The last dot plot, released in June, reflected a consensus for two rate cuts this year, even as officials weighed the economic effects of the Trump administration’s policies on tariffs, immigration and taxes.
Now investors are watching closely to see whether the Fed will reaffirm that view or pivot toward a more aggressive easing stance. Inflation remains about a full percentage point above the central bank’s 2% target, but recent data have also pointed to softening in the labor market.
Matthew Luzzetti, chief U.S. economist at Deutsche Bank, said a path toward more rate cuts would likely be driven by “risk management considerations,” given rising downside risks to employment and only limited upside risks to inflation.
On the Move
- Oracle (ORCL) gained 1.5% on Tuesday after The Wall Street Journal reported the company is expected to be among the firms taking control of social media platform TikTok under a developing deal with China.
- General Mills (GIS) slipped 1.7% in pre-market trading despite beating Wall Street’s earnings-per-share consensus and delivering revenue in line with expectations. The packaged food giant also reaffirmed its fiscal 2026 outlook.
- Nvidia (NVDA) fell 1% in early trading following a Financial Times report that China’s government has advised domestic tech firms to stop purchasing Nvidia products. The warning comes after Beijing accused the chipmaker of violating its anti-monopoly law.
- Alibaba (BABA) jumped 2.6% before the open, extending a rally of more than 30% over the past month as investors welcomed the company’s renewed focus on AI and the larger role of founder Jack Ma.
- Netflix (NFLX) added 1% in pre-market trading after Loop Capital upgraded the stock to Buy from Hold. The firm cited strong fundamentals, third-quarter engagement, a robust fourth-quarter content slate and higher long-term margin assumptions.
- Workday (WDAY) surged 10% in early trading after Barron’s reported that activist investor Elliott Investment Management disclosed a $2 billion stake in the enterprise software firm.
- Eli Lilly (LLY) edged down 1.5% ahead of the open as Berenberg downgraded the stock to Hold from Buy, saying the obesity drug market upgrade cycle has plateaued.
- Tesla (TSLA) dipped nearly 1% in pre-market action, marking its first pullback in weeks after a sharp rally that was buoyed by CEO Elon Musk’s recent share purchase.
- Warner Bros. Discovery (WBD) plunged more than 6% Monday after TD Cowen downgraded the stock to Hold from Buy, citing downside risk if the proposed acquisition by Paramount Skydance (PSKY) does not go through, according to Briefing.com.
- The Financial Times reported that China has directed its largest technology firms, including Alibaba, to stop purchasing Nvidia’s (NVDA) AI chips specifically designed for the Chinese market—effectively halting tens of thousands of orders. Nvidia shares fell more than 2% on the news.
- Cracker Barrel (CBRL) results are drawing attention amid controversy over the company’s now-abandoned logo change.
- Reddit shares recovered part of their earlier losses on Wednesday after Bloomberg reported the social media company is negotiating its next content-sharing deal with Google. The stock, which had fallen as much as 6.5% earlier in the session, was down a more modest 3% by afternoon trading following the report.
- Opendoor’s (OPEN) stock moved up nearly 16% in morning trading to trade above $10, for a gain of nearly 225% over the past month.
- Hims & Hers Health (HIMS) stock fell nearly 3% on Wednesday morning, after dropping nearly 6% in the previous trading session.
What’s Ahead
Despite inflation remaining above the Fed’s 2% goal, policymakers appear set to resume rate cuts for the first time this year to support maximum employment. Updated quarterly forecasts for rates, unemployment, inflation and growth will also be released.
The June “dot plot” projected the fed funds rate falling to 3.6% by year-end 2026, but markets are pricing in a drop below 3% over the same period.
Pump Radar
Stock Alerts