[BRIEFING.COM] The S&P 500 (-0.7%), Nasdaq Composite (-0.4%), and DJIA (-1.4%) are extending their post-FOMC selloff as the market enters the final half-hour of the session.

The Treasury market listened to what Fed Chair Kevin Warsh said regarding above-target inflation, and its initial reaction implies that there is a belief that the inflation fight isn't a one-and-done rate-hike kind of thing. The 2-year note yield spiked from 4.60% shortly before the policy announcement at 2:00 p.m. to 4.73% as of this writing. The 10-year note yield went from 4.95% to 5.02%.

In turn, stock prices have fallen as rates have risen, cognizant that today's action and the chair's comments fall into the camp of being a "hawkish hike" (i.e., there is more to come), as opposed to a "dovish hike" (i.e., there is a good chance that we are done).

[BRIEFING.COM] The S&P 500 (-0.4%), Nasdaq Composite (flat), and DJIA (-0.9%) are at their lows for the day as the market digests commentary from Fed Chair Kevin Warsh at the press conference portion of today's FOMC meeting.

While stocks moved very little in reaction to the FOMC's decision to raise rates for the first time since January 2023, the market turned lower amid Mr. Warsh's commentary on inflation. Mr. Warsh said the "plain fact is that inflation is too high, and has been for too long," adding that this summer's inflation readings have not convinced him that underlying trends have meaningfully improved. He pointed to continued price increases above 3.0% across too many categories on both six- and 12-month bases, while also reiterating that commodity prices bear watching following recent increases in several key inputs.

The remarks have reinforced the view that today's rate hike may not be an isolated move, with investors focused on the possibility that persistent inflation pressures could require additional tightening in the months ahead.

Only the information technology (+0.1%) and health care (+0.2%) sectors remain in positive territory, though the PHLX Semiconductor Index (+0.2%) has once again ceded nearly all of its early gain.

Meanwhile, the financials sector (-1.8%) has continued to move sharply lower.

[BRIEFING.COM] The FOMC decision everyone was waiting for-and expecting-is out. The FOMC voted to raise the target range for the fed funds rate by 25 basis points to 3.75-4.00%. The surprise dynamic of that decision is that it was a unanimous vote (12-0).

That unanimity implied Fed Chair Warsh voted for the rate hike, as did his predecessor, Jerome Powell. There will be a natural tendency to highlight that agreement as a strong signal that Mr. Warsh is not being steered by politics. We'll let others argue that point. We are simply explaining how the market might be inclined to read that 12-0 vote.

The directive called attention to the uncertainty driven by geopolitical developments, as well as to the fact that domestic spending has been resilient. The driving principle, though, is that "inflation remains elevated." The directive concludes with a direct message: "The Committee will deliver price stability."

In other words, the FOMC may not be done yet raising rates if progress on inflation isn't seen. That perspective is embedded in the dot plot, which shows 16 of 18 Fed officials expecting at least one more rate hike this year. There isn't a consensus on a rate cut, either, until 2028.

A lot will change between now and then, so these dots can very much be thought of as moving targets. For now, it can be said Fed Chair Warsh and his committee took a shot at bringing down inflation by raising rates.

The initial market reaction to this decision and a Summary of Economic Projections that saw an increase in the median estimate for the change in real GDP this year (to 2.3% from 2.2%), the change in PCE inflation (to 3.7% from 3.6%), the change in core PCE inflation (to 3.4% from 3.3%), and a decrease in the unemployment rate (to 4.1% from 4.3%) has been relatively muted.

That would suggest a genuine lack of surprise, but it is likely more of a wait-and-see response in front of Fed Chair Warsh's press conference at 2:30 p.m. ET.

[BRIEFING.COM] The tech-heavy Nasdaq Composite (+0.56%) is in first place this afternoon, up about 146 points with the Fed's policy decision on tap for the top of the hour.

Gold futures settled $57.80 higher (+1.3%) at $4,390.60/oz, as lower oil prices and Treasury yields eased concerns about inflation and higher interest rates. The rebound came despite expectations for the Fed to raise rates by 25 bps, with falling yields reducing the opportunity cost of holding gold.

Meanwhile, the U.S. Dollar Index is up less than +0.1% to $99.71.

[BRIEFING.COM] The Dow Jones Industrial Average (+0.02%) is up about 13 points this afternoon, climbing out of the red over the last half hour.

A look inside the DJIA shows that IBM (IBM 241.00, -7.37, -2.97%), Chevron (CVX 213.02, -4.75, -2.18%), and American Express (AXP 317.48, -6.95, -2.14%) are underperforming.

Meanwhile, Walt Disney (DIS 108.04, +1.62, +1.52%) is near the top of the standings.

The DJIA is now -0.89% lower week-to-date.

[BRIEFING.COM] The major averages remain mostly higher just after midday.

The financials sector (-0.7%) continues to lag the broader market, with banking names broadly lower as investors brace for this afternoon's FOMC decision, which is widely expected to result in a hike that could be the first of several in a tightening cycle.

Additionally, Coinbase Global (COIN 165.65, -6.46, -3.75%) and Robinhood Markets (HOOD 105.88, -4.58, -4.14%) move lower again today after the Clarity Act crypto regulation bill failed to pass in the Senate.

[BRIEFING.COM] The S&P 500 (+0.4%), Nasdaq Composite (+0.8%), and DJIA (+0.1%) are now higher across the board at midday. 

Advanced Micro Devices (AMD 525.34, +21.14, +4.19%) and peers traded lower to start the week following Anthropic's call over the weekend to "pace the frontier," or slow the development of increasingly capable AI models. The proposal received support from several other leading AI executives amid growing safety and security concerns. With semiconductor and tech hardware names broadly higher today, the rebound may reflect some reassessment of what pacing frontier AI development means for the underlying infrastructure demand picture. Hyperscaler spending remains exceptionally high amid continued strong demand for AI and cloud capacity. For AMD, the growing importance of inference remains a key part of the demand outlook. Existing trained models still require computing capacity as they are deployed more broadly across real-world applications. AMD has said inference and agentic AI are driving increasing demand for both accelerators and CPUs. AMD now expects the data center AI accelerator market to reach roughly $1.4 trln and the server CPU market roughly $220 bln by 2030. Still, the calls to pace frontier development highlight growing concerns around the speed and safety of AI advancement. The initial reaction also illustrates how sensitive AMD and other AI infrastructure names remain to any indication that the currently robust demand and spending outlook could slow.

[BRIEFING.COM] The S&P 500 (+0.4%), Nasdaq Composite (+0.8%), and DJIA (flat) are off to their best start of the week, though the market's real directional driver lies ahead in the 2:00 p.m. ET FOMC decision.

So far, stocks are supported by a notable pullback in oil prices, with WTI crude down $4.00 (-3.8%) to $101.82 per barrel. The energy sector (-2.6%) is a laggard as a result, though the financials sector (-0.6%) is the only other S&P 500 sector that trades lower.

Meanwhile, the information technology sector (+0.9%) leads the market higher, supported by a solid gain in the PHLX Semiconductor Index (+1.7%) after yesterday's rebound attempt largely fizzled.

Outside the S&P 500, the Russell 2000 (+0.5%) and S&P Mid Cap 400 (+0.4%) also trade modestly higher.

[BRIEFING.COM] The major averages sit bear their best levels of the session, with the DJIA reclaiming its flat line.

SK hynix Inc. (SKHY 179.38, +4.55, +2.60%) is trading higher after Reuters reported exploratory talks with Intel (INTC 101.58, +4.44, +4.57%) that could give the memory maker its first U.S. chip fabrication capacity, while potentially bringing Intel in as a partner for its delayed Ohio project. The companies are considering a lease of part of the facility or a venture involving major cloud customers, but SK hynix says no partner or production plan has been finalized. A broader technology rally and resolution of a separate labor dispute may also be supporting the shares.

Currently the information technology sector (+0.9%) still sits atop the S&P 500 sector leaderboard, with the PHLX Semiconductor Index up 1.8%. 

[BRIEFING.COM] The S&P 500 (+0.2%), Nasdaq Composite (+0.6%), and DJIA (-0.3%) remain little changed from their opening lines.

J.B. Hunt Transport (JBHT 237.75, -35.30, -12.93%) is under pressure following comments it made at a Morgan Stanley conference last night, with investors focused on a meaningful Q3 earnings headwind from higher fuel costs and the lag in passing those costs through to customers. JBHT expects Q2 to Q3 earnings to decline 5-10%, which would put Q3 EPS at roughly $1.72-1.81, a good bit below current analyst expectations. While underlying freight demand remains strong and JBHT continues to gain share in Intermodal, the near-term earnings setup has become more challenging. The commentary also raises concerns for other freight companies heading into Q3 earnings season.

Old Dominion (ODFL 176.41, -4.55, -2.51%), FedEx Freight (FDXF 122.58, -4.36, -3.43%), and UPS (UPS 99.80, -2.55, -2.49%) are among the other notable freight names that trade lower, though broader strength in the industrials sector (+0.2%) keeps it modestly higher.

[BRIEFING.COM] The S&P 500 (+0.4%), Nasdaq Composite (+0.7%), and DJIA (-0.2%) are mostly higher just after the open, with support coming from a rebound in tech names and lower oil prices.

Eight S&P 500 sectors trade higher, led by the top-weighted information technology sector (+0.9%). Semiconductor stocks are off to a solid start after yesterday's rebound attempt from Monday's slide largely faded throughout the day. The PHLX Semiconductor Index is up 1.9%.

Mega-cap tech stocks as a whole tilt higher, helping the communication services (+0.7%) sector rise to a similar gain. The Vanguard Mega Cap Growth ETF is up 0.7%.

Meanwhile, the energy sector (-1.9%) is sharply lower as crude oil moves $2.50 (-2.3%) lower to $103.36 per barrel. Chevron (CVX 214.06, -3.70, -1.70%) is a Dow laggard, while several components of the financials sector (-0.5%) also weigh on the thirty-stock index.

Just released, business inventories increased 0.8% month-over-month in July (Briefing.com consensus 0.2%), following an upwardly revised 0.1% increase (from 0.0%) in June.

The NAHB Housing Market Index contracted to 32 in September (Briefing.com consensus 34), from the prior reading of 35.

Equity futures continue to point to a higher open ahead of this afternoon's 2:00 p.m. FOMC decision and subsequent press conference with Fed Chair Kevin Warsh.

Total retail sales increased 1.2% month-over-month in August (Briefing.com consensus: 0.9%) following an upwardly revised 0.5% decline (from -0.6%) in July. Excluding autos, retail sales surged 1.4% (Briefing.com consensus: 0.5%) following an upwardly revised 0.2% decline (from -0.3%) in July.

The key takeaway from the report is that it is indicative of ongoing strength in consumer spending on goods. Take gas station sales out of the equation, and retail sales were still up 1.1% month-over-month; core sales, which exclude autos, gasoline, building materials, and food services, jumped 1.4%.

The S&P 500 futures currently trade 30 points above fair value. 

Equity indices in the Asia-Pacific region ended the midweek session on a higher note. There was some speculation that President Trump and China's President Xi will discuss reducing tariffs on agriculture and energy products when they meet next week. The Chinese delegation will reportedly include multiple CEOs and NVIDIA CEO Huang will take part in the State Dinner. Japan's Prime Minister Takaichi confirmed that she will make changes to her cabinet tomorrow, but key officials are expected to maintain their posts. Hong Kong released its first five-year plan, expecting "opportunities and challenges" during that period.

• In economic data:
  • Japan's August trade deficit totaled JPY840 billion (expected deficit of JPY1.00 trillion; last deficit of JPY680 billion).
  • Japan's August imports increased 28.0% yr/yr (expected 26.3%; last 27.9%).
  • Japan's August exports increased 19.3% yr/yr (expected 18.2%; last 23.2%).
  • Japan's July core machinery orders fell 3.7% m/m (expected -1.2%; last 9.7%) and increased 11.2% yr/yr (expected 15.3%; last 16.9%).
  • Australia's August MI Leading Index was unchanged (last 0.0%).
  • New Zealand's Q3 Westpac Consumer Sentiment rose to 89.5 from 80.4.
  • New Zealand's Q2 current account deficit narrowed to 3.2% of GDP from 3.6% of GDP.

---Equity Markets---

• Japan's Nikkei: +0.7%
• Hong Kong's Hang Seng: +0.2%
• China's Shanghai Composite: +0.7%
• India's Sensex: +0.5%
• South Korea's Kospi: +1.4%
• Australia's ASX All Ordinaries: +0.3%

Major European indices trade in the green. The U.K.'s CPI accelerated for the second month in a row, rising to 3.1% yr/yr, while core CPI remained at 2.6% yr/yr for the fourth month in a row. The Bank of England is not expected to announce a rate hike tomorrow, but the market is looking for an announcement that the central bank will stop active sales of 20- and 30-yr Gilts. British homebuilders outperform after upbeat results from Barratt Redrow. European Commission President von der Leyen called on member states to admit Canada as an associate member.

• In economic data:
  • Eurozone July industrial production fell 0.1% m/m (expected -0.2%; last -0.1%) and was unchanged yr/yr (expected -0.3%; last -0.3%).
  • Eurozone Q2 wages increased 3.0% yr/yr (last 3.4%).
  • The Eurozone Q2 Labor Cost Index increased 3.1% yr/yr (expected 3.0%; last 3.2%).
  • U.K. August CPI increased 0.5% m/m, as expected (last 0.3%), and 3.1% yr/yr, as expected (last 2.9%).
  • U.K. August core CPI increased 0.3% m/m, as expected (last 0.2%), and 2.6% yr/yr, as expected (last 2.6%).
  • U.K. August input PPI increased 0.3% m/m (expected 0.6%; last -0.8%).
  • U.K. August output PPI increased 0.3% m/m (last 0.5%).
  • The U.K. August House Price Index increased 1.4% yr/yr (expected 2.1%; last 2.0%).
  • Italy's August CPI increased 0.5% m/m, as expected (last 0.3%), and 3.3% yr/yr, as expected (last 2.9%).

---Equity Markets---

• STOXX Europe 600: +0.6%
• Germany's DAX: +0.3%
• U.K.'s FTSE 100: +0.6%
• France's CAC 40: +0.6%
• Italy's FTSE MIB: +0.8%
• Spain's IBEX 35: +0.5%

The S&P 500 futures currently trade 30 points above fair value. 

Just released, total retail sales rose 1.2% month-over-month in August (Briefing.com consensus: 0.9%) after a revised 0.5% decrease in July (from -0.6%).

Excluding autos, retail sales increased 1.4% month-over-month (Briefing.com consensus: 0.5%) following an upwardly revised 0.2% decline in July (from -0.3%).

Import prices increased 0.7% in August from an upwardly revised 0.3% decrease in July (from -0.4%).

Excluding oil, import prices increased 0.8%, following a downwardly revised 0.3% increase in July (from 0.4%).

Export prices rose 0.6% month-over-moth in August after falling a downwardly revised 1.4% (from -1.3%) in July. Excluding agriculture, export prices increased 0.7%, following a downwardly revised 1.6% decrease (from -1.5%) in July.

Equity futures are pointing to a higher open as investors await the afternoon FOMC decision. The CME FedWatch Tool currently assigns a 92.7% probability to a 25-basis-point rate hike this afternoon, with many analysts arguing that the Fed deciding to hold rates could damage its credibility given the current inflation backdrop. As always, Fed Chair Kevin Warsh's press conference portion of the meeting will be closely watched for any signals on the expected policy path going forward, especially since Warsh himself is an advocate of a "quieter Fed," and today's implied hike could be the beginning of a broader tightening cycle rather than an isolated policy adjustment.

Oil prices are moving lower this morning, providing some support for equity futures, with WTI crude trading around $103 per barrel after settling above $105 yesterday.

Stocks finished broadly lower on Tuesday as another surge in crude oil and elevated Treasury yields weighed on the market. The S&P 500 (-0.5%), Nasdaq Composite (-0.8%), and DJIA (-0.6%) logged their second consecutive declines to start the week, with the energy sector standing out as one of the few areas of strength.

On the U.S. data front:

• 09/12 MBA Mortgage Applications Index -4.1%; prior -2.7%

Today's remaining economic calendar:

• 8:30 AM ET: August Retail Sales; Briefing.com consensus 0.9%; prior -0.6%
• 8:30 AM ET: August Retail Sales, ex-auto; Briefing.com consensus 0.5%; prior -0.3%
• 8:30 AM ET: August Import Prices; prior -0.4%
• 8:30 AM ET: August Import Prices ex-oil; prior 0.4%
• 8:30 AM ET: August Export Prices; prior -1.3%
• 8:30 AM ET: August Export Prices ex-ag.; prior -1.5%
• 10:00 AM ET: July Business Inventories; Briefing.com consensus 0.2%; prior 0.0%
• 10:00 AM ET: September NAHB Housing Market Index; Briefing.com consensus 34; prior 35
• 10:30 AM ET: 09/12 EIA Crude Oil Inventories; prior -0.39M
• 2:00 PM ET: September FOMC Decision; Briefing.com consensus 3.75-4.00%; prior 3.50-3.75%
• 4:00 PM ET: July Net Long-Term TIC Flows; prior -$172.7B

In corporate news:

• OpenAI is considering a new funding round, according to The Information.
• CEOs from Meta Platforms (META 674.80, +4.56, +0.7%) and NVIDIA (NVDA 213.58, +1.41, +0.7%) have rejected calls to slow down the pace of AI development, according to Financial Times.
• SK Hynix (SKHY 181.14, +6.31, +3.5%) said no plans have been made yet in regard to an earlier report that said the company is in talks with Intel (INTC 100.37, +3.23, +3.3%) to make memory chips in the U.S. for the first time

Reviewing overnight developments:

Equity markets ended the session broadly higher amid speculation that Presidents Trump and Xi could discuss reducing tariffs on agricultural and energy products when they meet next week. Japan's Nikkei: +0.7%, Hong Kong's Hang Seng: +0.2%, China's Shanghai Composite: +0.7%, India's Sensex: +0.5%, South Korea's Kospi: +1.4%, Australia's ASX All Ordinaries: +0.3%.

In news:

• Japan's Prime Minister Takaichi confirmed that she will make cabinet changes tomorrow, though key officials are expected to retain their posts.
• Hong Kong released its first five-year plan, which anticipates both opportunities and challenges.

In economic data:

• Japan's August trade deficit JPY840 bln (expected deficit of JPY1.00 trln; last deficit of JPY680 bln). August Imports 28.0% yr/yr (expected 26.3%; last 27.9%) and Exports 19.3% yr/yr (expected 18.2%; last 23.2%). July Core Machinery Orders -3.7% m/m (expected -1.2%; last 9.7%); 11.2% yr/yr (expected 15.3%; last 16.9%)
• Australia's August MI Leading Index 0.0% (last 0.0%)
• New Zealand's Q3 Westpac Consumer Sentiment 89.5 (last 80.4) and Q2 Current Account deficit 3.2% of GDP (last 3.6% of GDP)

Major European markets trade broadly higher, with British homebuilders outperforming after upbeat results from Barratt Redrow. STOXX Europe 600: +0.6%, Germany's DAX: +0.3%, U.K.'s FTSE 100: +0.6%, France's CAC 40: +0.5%, Italy's FTSE MIB: +0.8%, Spain's IBEX 35: +0.4%.

In news:

• The Bank of England is not expected to raise rates tomorrow, though the market is looking for an end to active sales of 20- and 30-year Gilts.
• European Commission President von der Leyen called on member states to admit Canada as an associate member.

In economic data:

• Eurozone's July Industrial Production -0.1% m/m (expected -0.2%; last -0.1%); 0.0% yr/yr (expected -0.3%; last -0.3%). Q2 Wages 3.0% yr/yr (last 3.4%) and Q2 Labor Cost Index 3.1% yr/yr (expected 3.0%; last 3.2%)
• U.K.'s August CPI 0.5% m/m, as expected (last 0.3%); 3.1% yr/yr, as expected (last 2.9%). August Core CPI 0.3% m/m, as expected (last 0.2%); 2.6% yr/yr, as expected (last 2.6%). August Input PPI 0.3% m/m (expected 0.6%; last -0.8%) and Output PPI 0.3% m/m (last 0.5%). August House Price Index 1.4% yr/yr (expected 2.1%; last 2.0%)
• Italy's August CPI 0.5% m/m, as expected (last 0.3%); 3.3% yr/yr, as expected (last 2.9%)

[BRIEFING.COM] The major averages finished lower for the second consecutive session on Tuesday as another surge in crude oil, elevated Treasury yields, and caution ahead of tomorrow's FOMC decision kept buying interest subdued. The S&P 500 (-0.5%), Nasdaq Composite (-0.8%), and DJIA (-0.6%) all ended in negative territory following a relatively quiet afternoon.

Oil prices were again a major influence on the session. WTI crude settled $4.59 higher (+4.5%) at $105.82 per barrel, marking its tenth gain in the past 11 sessions and leaving oil nearly $20 per barrel higher in September as the conflict with Iran continues. The latest advance pushed crude to its highest level since late May and helped the energy sector (+2.3%) finish comfortably atop the sector standings.

Higher interest rates presented another obstacle for equities. The 10-year note yield rose four basis points to 5.00%, keeping pressure on rate-sensitive areas of the market. The utilities sector (-1.2%) was among the more pronounced laggards after also retreating yesterday, as elevated Treasury yields increased the relative appeal of fixed-income alternatives.

The consumer discretionary sector (-1.8%) finished at the bottom of the standings amid continued concerns about inflation squeezing consumer-company profit margins. Homebuilders were also pressured by the elevated rate environment, while Chipotle Mexican Grill (CMG 34.83, -2.20, -5.94%) and Carvana (CVNA 66.89, -3.98, -5.62%) were among the group's notable individual laggards.

Technology stocks offered some relative support after yesterday's sharp semiconductor selloff, although the early rebound in chip stocks lost considerable momentum as the session progressed. The PHLX Semiconductor Index (+0.4%) finished modestly higher after gaining nearly 2.0% this morning, while the information technology sector (-0.3%) ended with a relatively modest loss.

Mega-cap weakness remained a drag elsewhere, contributing to the communication services sector's (-0.8%) decline. The financials sector (-0.3%) also faced pressure though it recovered from its worst levels, with weakness in crypto-related names intensifying during the afternoon after the U.S. Senate failed to advance the Clarity Act in its first procedural vote. Coinbase Global (COIN 172.11, -19.34, -10.10%) finished among the worst-performing S&P 500 components after already trading sharply lower earlier in the session as Bitcoin gave back yesterday's gain.

Aside from the energy sector, only the materials sector (+0.4%) managed to finish higher after spending part of the morning in negative territory.

Corporate headlines were otherwise relatively quiet and did little to alter the broader direction of the market. The lack of meaningful buying interest also came as investors prepared for Wednesday's FOMC decision. The CME FedWatch Tool assigns a 94.5% probability to a 25-basis-point rate hike. With crude oil above $105 per barrel and the 10-year yield back at 5.00%, the Fed decision takes on added significance as investors weigh persistent inflation pressures against an increasingly difficult backdrop for equities.

U.S. Treasuries found renewed pressure on Tuesday, causing longer tenors to give back their modest gains from the start of the week. The 2-year note yield settled up three basis points to 4.66%, and the 10-year note yield settled up four basis points to 5.0%. 

• Russell 2000: +15.7% YTD
• Nasdaq Composite: +11.8% YTD
• S&P 500: +10.8% YTD
• S&P Mid Cap 400: +10.8% YTD
• DJIA: +8.4% YTD

Reviewing today's data: 

• The Empire State Manufacturing Index fell to 7.6 in September (Briefing.com consensus 14.1) from 20.6 in August.