The S&P 500 Index ($SPX) (SPY) on Wednesday closed down -0.10%, the Dow Jones Industrials Index ($DOWI) (DIA) closed up +0.57%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed down -0.21%.  September E-mini S&P futures (ESU25) fell -0.09%, and September E-mini Nasdaq futures (NQU25) fell -0.14%. 

Stock indexes settled mixed on Wednesday, with the Dow Jones Industrials climbing to a new all-time high.  The broader market gave up an early advance and turned lower Wednesday afternoon when bond yields rose on hawkish comments from Fed Chair Powell, who highlighted the risk of persistent inflation and signaled less support for deeper easing of Fed policy.  After initially falling to a 5.25-month low of 3.99% on Wednesday, the 10-year T-note yield finished up +4 bp at 4.07%. 

Stocks initially spiked higher on Wednesday afternoon after the Fed cut interest rates, as expected, by -25 bp and signaled -50 bp more of rate cuts by year's end.  The FOMC also raised its US 2025 GDP forecast, a supportive factor for stocks. 

Weakness in chipmakers was also bearish for the overall market, as Nvidia fell more than -2% after the Financial Times reported that the Cyberspace Administration of China, China's internet watchdog, has instructed the country's biggest companies to terminate orders for Nvidia's RTX Pro 6000D chip. 

Wednesday's US housing news was weaker than expected and negative for stocks.  Aug housing starts fell -8.5% m/m to 1.307 million, weaker than expectations of 1.365 million.  Aug building permits, a proxy for future construction, unexpectedly fell -3.7% m/m to a 5.25-year low of 1.312 million, weaker than expectations of an increase to 1.370 million.

US MBA mortgage applications rose +29.7% in the week ended September 12, with the purchase mortgage sub-index up +2.9% and the refinancing mortgage sub-index up +57.7%.  The average 20-year fixed rate mortgage fell -10 bp to an 11-month low of 6.39% from 6.49% in the prior week.

The FOMC, as expected, voted 11-1 to cut the federal funds target range by -25 bp to 4.00%-4.25% from 4.25%-4.50% and said, "downside risks to employment have risen, but inflation has moved up and remains somewhat elevated."

The Fed's dot plot projects the fed funds target at 3.625% by the end of 2025, signaling another 50 bp of rate cuts this year.  The fed funds target range for the end of 2026 is 3.375%, signaling only one -25 bp rate cut in 2026.

The FOMC boosted its 2025 US GDP estimate to +1.6% from +1.4% in June and kept its 2025 core PCE inflation estimate unchanged from June at +3.1%, well above the Fed’s 2% inflation target.

Fed Chair Powell said the revised jobs numbers mean the labor market is no longer solid, and the Fed's move to cut interest rates to a "more neutral" position will "presumably" be helpful to the labor market.  He added. "We have begun to see" higher goods prices feed through to inflation, and "we do expect them to continue to build" even into next year.

The markets this week will continue to focus on any fresh trade or tariff news.  On Thursday, weekly initial unemployment claims are expected to fall by -23,000 to 240,000.

The markets are pricing in a 90% chance of a -25 bp rate cut at the next FOMC meeting on Oct 28-29. 

Overseas stock markets on Wednesday settled mixed.  The Euro Stoxx 50 closed down by -0.05%.  China's Shanghai Composite closed up +0.37%.  Japan's Nikkei Stock 225 closed down -0.25%.

Interest Rates

December 10-year T-notes (ZNZ5) on Wednesday closed down by -13.5 ticks.  The 10-year T-note yield rose by +4.0 bp to 4.068%.  T-notes whipsawed lower on Wednesday, and the 10-year T-note yield moved higher from a 5.25-month low of 3.988%.  T-note prices saw early support from Wednesday's weaker-than-expected US Aug housing starts and building permits reports.  Also, Wednesday's action by the FOMC to cut interest rates by 25 bp and signal another 50 bp of rate cuts by year's end was supportive for T-notes.

However, T-notes gave up their gains and turned lower after the FOMC boosted its 2025 US GDP estimate and said, "inflation has moved up and remains somewhat elevated.”  Losses in T-notes accelerated on Wednesday afternoon when Fed Chair Powell noted that higher goods prices are feeding through to inflation and that the FOMC expects inflation to continue to build into next year, which may limit how much more the Fed can cut interest rates.

Concerns about Fed independence are negatively impacting T-note prices due to President Trump's attempt to fire Fed Governor Cook and Stephen Miran's intention to hold a Fed Governor position while remaining technically in his White House role on the Council of Economic Advisors.

European government bond yields on Wednesday moved lower.  The 10-year German bund yield fell -1.8 bp to 2.675%. The 10-year UK gilt yield fell -1.4 bp to 4.625%.

Eurozone Aug CPI was revised lower to +2.0% y/y from the previously reported +2.1% y/y.  The Aug core CPI was left unrevised at +2.3% y/y. 

UK Aug CPI was unchanged from July at +3.8% y/y, right on expectations.  Aug core CPI eased to +3.6% y/y from +3.8% y/y in July, right on expectations.

Swaps are discounting a 1% chance for a -25 bp rate cut by the ECB at its next policy meeting on October 30.

US Stock Movers

Nvidia (NVDA) closed down more than -2% to lead losers in the Dow Jones industrials after the Financial Times reported that the Cyberspace Administration of China, China's internet watchdog, has instructed the country's biggest companies to terminate orders for Nvidia's RTX Pro 6000D chip. 

Home building suppliers retreated on Wednesday after US Aug housing starts and building permits fell more than expected.  Builders FirstSource (BLDR) closed down more than -5% to lead losers in the S&P 500.  Also, Mohawk Industries (MHK) closed down more than -4%, and Home Depot (HD) and Weyerhaeuser (WY) closed down more than -1%.

Manchester United (MANU) closed down more than -6% after reporting a Q4 loss and cutting its 2026 revenue outlook. 

Uber Technologies (UBER) closed down more than -4% on signs of insider selling after an SEC filing showed CEO Khosrowshahi sold $28.6 million of shares last Friday.

Warner Bros Discovery (WBD) closed down more than -1% on signs of insider selling after CFO Wiedenfels sold over $14 million of shares on Monday.

Roivant Sciences Ltd (ROIV) closed up more than +7% after it said its brepocitinib, which it developed with Priovant Therapeutics to treat dermatomyositis, met its primary endpoint in a Phase 3 trial. 

Hologic (HOLX) closed up more than +7% to lead gainers in the S&P 500 after Blackstone Inc. and TPG Inc. are said to revive interest in a takeover of the company. 

Workday (WDAY) closed up more than +7% to lead gainers in the Nasdaq 100 after Guggenheim Securities upgraded the stock to buy from neutral with a price target of $285.

Zillow Group (ZG) closed up more than +2% after Bernstein upgraded the stock to outperform from market perform with a price target of $105. 

PayPal Holdings (PYPL) closed up more than +2% after it entered into a multi-year partnership with Google to advance commerce solutions. 

Earnings Reports(9/18/2025)

Darden Restaurants Inc (DRI), Ennis Inc (EBF), FactSet Research Systems Inc (FDS), FedEx Corp (FDX), Golden Matrix Group Inc (GMGI), Lennar Corp (LEN), Scholastic Corp (SCHL).