The S&P 500 Index ($SPX) (SPY) today is down -0.15%, the Dow Jones Industrials Index ($DOWI) (DIA) is down -0.36%, and the Nasdaq 100 Index ($IUXX) (QQQ) is down -0.10%.  September E-mini S&P futures (ESU25) are down -0.23%, and September E-mini Nasdaq futures (NQU25) are down -0.16%. 

Stock indexes gave up early gains today and turned lower as the 2-day FOMC meeting began.  The markets are expecting that the Fed will cut interest rates at Wednesday’s conclusion of the 2-day FOMC meeting.  However, the S&P 500 and Nasdaq 100 stocks fell from new record highs and turned lower after today’s stronger-than-expected US retail sales and manufacturing production reports were hawkish for Fed policy. 

Signs that US consumer spending is holding up are a positive factor for the economy and equity markets after Aug retail sales rose more than expected.  Also, strength in technology stocks is supportive of the broader market, led by a rally in semiconductor stocks. 

US Aug retail sales rose +0.6% m/m, stronger than expectations of +0.2% m/m.  Also, Aug retail sales ex-autos rose +0.7% m/m, stronger than expectations of +0.4% m/m. 

The US Aug import price index ex-petroleum rose +0.2% m/m, slightly stronger than expectations of +0.1% m/m.

US Aug manufacturing production unexpectedly rose +0.2% m/m versus expectations for a -0.2% m/m decline.

The US Sep NAHB housing market index was unchanged at a 2.75-year low of 32, weaker than expectations of an increase to 33.

Most major US benchmark indexes, including the S&P 500, the Dow Jones Industrials, and the Nasdaq 100, continue to post record highs, driven by expectations of Fed interest rate cuts.  Weak labor market news and relatively contained inflation reports bolstered expectations for at least a -25 bp rate cut by the Fed at the Tue/Wed FOMC meeting and a total of -70 bp of rate cuts by year’s end. 

The markets this week will continue to focus on any fresh trade or tariff news.  On Wednesday, the FOMC is expected to cut the federal funds rate target by -25 bp to 4.00%-4.25% from 4.25%-4.50% and Fed Chair Powell will deliver post-FOMC meeting comments.  On Thursday, weekly initial unemployment claims are expected to fall by -23,000 to 240,000.

The markets are pricing in a 100% chance of a -25 bp rate cut and a 5% chance of a -50 bp rate cut at the conclusion of the Tue/Wed FOMC meeting.  After the fully expected -25 bp rate cut at this week’s meeting, the markets are discounting an 84% chance of a second -25 bp rate cut at the next FOMC meeting on Oct 28-29.  The markets are pricing in an overall -68 bp rate cut in the federal funds rate by year-end to 3.65% from the current 4.33% rate.

Overseas stock markets today are mixed.  The Euro Stoxx 50 is down -0.86%.  China’s Shanghai Composite closed up +0.04%.  Japan’s Nikkei Stock 225 rallied to a new record high and closed up +0.30%.

Interest Rates

December 10-year T-notes (ZNZ5) today are up +1 tick.  The 10-year T-note yield is down by -0.2 bp to 4.036%.  Dec T-notes recovered from early losses and are slightly higher. Short covering pushed T-note higher today after stocks gave up early gains and turned lower.  T-notes also have support on expectations that the Fed will cut interest rates by at least -25 bp at the conclusion of today’s 2-day FOMC meeting on Wednesday.

T-notes initially moved lower today after the US retail sales and manufacturing production reports rose more than expected.  Also, supply pressures are weighing on T-notes as the Treasury will auction $13 billion of 20-year T-bonds later today. 

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 are moving higher today.  The 10-year German bund yield is up +0.8 bp to 2.699%. The 10-year UK gilt yield is up +2.2 bp to 4.655%.

Eurozone July industrial production rose +0.3% m/m, weaker than expectations of +0.4% m/m, but June was revised upward to -0.6% m/m from -1.3% m/m.

Eurozone Q2 labor costs increased to +3.6% y/y from +3.4% y/y in Q1. 

The German Sep ZEW survey expectations of economic growth unexpectedly rose +2.6 to 37.3, stronger than expectations of a decline to 25.0.

ECB Governing Council member Simkus said, “It is clear that inflation in the Eurozone is currently at the target level, and if we look at the medium term, it is still hovering around 2% or very close to it.  Given these trends, the sequence of interest rate cuts by the ECB is very close to the end.”

Swaps are discounting a 2% chance for a -25 bp rate cut by the ECB at its next policy meeting on October 30.

US Stock Movers

Strength in chip makers today is leading technology stocks higher. ON Semiconductor (ON) is up more than +2% to lead gainers in the Nasdaq 100.  Also, Intel (INTC), ASML Holding NV (ASML), Qualcomm (QCOM), and Microchip Technology (MCHP) are up more than +1%.

Energy producers and energy service providers are moving higher today, with the price of WTI crude up more than +1% at a 1.5-week high.  APA Corp (APA) is up more than +4% and Diamondback Energy (FANG) is up more than +2% to lead gainers in the Nasdaq 100.  Also, Devon Energy (DVN), Occidental Petroleum (OXY), and Valero Energy (VLO) are up more than +2%.  In addition, ConocoPhillips (COP), Marathon Petroleum (MPC), Baker Hughes (BKR), Chevron (CVX), and Exxon Mobil (XOM) are up more than +1%.

Webtoon Entertainment (WBTN) is up more than +27% after Walt Disney said it plans to acquire a 2% equity interest in the company. 

Bloom Energy (BE) is up more than +6% after Morgan Stanley raised its price target on the stock to $85 from $44. 

Steel Dynamics (STLD) is up more than +5% to lead gainers in the S&P 500 after forecasting Q3 adjusted EPS of $2.60-$2.64, better than the consensus of $2.58.

Ferguson Enterprises (FERG) is up more than +5% after reporting Q4 revenue of $8.50 billion, stronger than the consensus of $8.41 billion. 

Oracle (ORCL) is up more than +2% after CBS News reported that the company is among a consortium of firms that would enable TikTok to continue operations in the US if a framework deal is finalized. 

Hershey (HSY) is up more than +2% after Goldman Sachs double upgraded the stock to buy from sell with a price target of $222. 

Chipotle Mexican Grill (CMG) is up more than +1% after its board approves an additional $500 million for its share buyback program. 

Dave & Buster’s Entertainment (PLAY) is down more than -16% after reporting Q2 adjusted EPS of 40 cents, well below the consensus of 89 cents. 

Rocket Lab (RKLB) is down more than -9% after announcing it plans to offer $750 million shares of common stock in an at-the-market offering. 

Warner Bros Discovery (WBD) is down more than -8% to lead losers in the S&P 500 and Nasdaq 100 after TD Cowen downgraded the stock to hold from buy.

Everest Group Ltd (EG) is down more than -2% after Wolfe Research initiated coverage on the stock with a recommendation of underperform and a price target of $287.

The New York Times (NYT) is down more than -2% after President Trump said he is bringing a $15 billion defamation and libel suit against the company.

Ralph Lauren (RL) is down more than -1% after it projected sales to grow at a mid-single-digit percentage annually through fiscal 2028, slower growth than the company has posted in recent quarters.

Earnings Reports(9/16/2025)

Evolution Petroleum Corp (EPM), Ferguson Enterprises Inc (FERG), Ispire Technology Inc (ISPR), NexPoint Diversified Real Estate Trust (NXDT), US Gold Corp (USAU).