September 16th Market Overview

Happy Wednesday

Fed raised rates for the first time in three years, and for about half an hour nobody cared. It was the most telegraphed move of the year.

Then Kevin Warsh took questions and said he would be hard pressed to call financial conditions restrictive, which in plain English means he thinks money is still too easy. The Dow gave back 630 points from there.

Let’s dig in...

Today's Big Picture

1. The Fed Hiked, Then Warsh Moved The Market

Unanimous 12-0, a quarter point, target range now 3.75 to 4. The market took the first increase since July 2023 in stride for about half an hour. Then Warsh said the move only removed "a dose of accommodation" and that he would be hard pressed to call financial conditions restrictive, which is a polite way of saying he wants them tighter. Sixteen of eighteen officials penciled in at least one more hike this year, putting the median at 4.1, and Warsh declined to submit a projection of his own for the second meeting running. Banks took the brunt, with Goldman Sachs, Wells Fargo, Bank of America and Citigroup all logging their worst session since February.

2. The 10-Year Above 5 For The First Time Since 2007

The yield sat at 4.95 before the decision and settled at 5.003. The 2-year did more work, moving from 4.602 just before the announcement to 4.712 after. This is the number that sets mortgages, not the Fed's. The 30-year was at 6 in February and is closing in on 7 now. Credit cards and auto loans reprice off the Fed within a billing cycle or two, but housing math tracks the bond market, and the bond market moved today.

3. Diesel Is The Inflation The Fed Can't Touch

Diesel hit a record $6.31 a gallon while crude closed under $102 and Brent eased. The problem is refining, not barrels, made worse by Ukrainian strikes on Russian energy infrastructure. Former New York Fed president William Dudley put it best: diesel is acting as though oil were at $200. Freight is wearing it first, with the Dow transports on a fifth straight weekly decline, the longest run since April 2025. Americans have spent $108 billion more on fuel since the Iran war began, according to Brown University's Climate Solutions Lab.

Also, If you haven’t read this report on emerging Nuclear energy stocks, I’d give it a quick look down now.

Market Overview

Index Performance

Stock Spotlight

Intel $INTC ( ▲ 3.93% )  
is in talks with SK Hynix to make its memory chips in the United States for the first time, according to Reuters. That would be the marquee foundry customer Lip-Bu Tan has been hunting since he took over. SK Hynix says nothing is decided.

J.B. Hunt Transport Services $JBHT ( ▼ 13.24% )  
warned third-quarter earnings will land below the second quarter, blaming the rising cost of buying outside truck capacity. Shares took the worst beating on the tape.

Chevron $CVX ( ▼ 3.04% )  
got a target bump from Goldman Sachs to $240 from $225. Analyst Neil Mehta pointed to Venezuela, where Chevron expects gross production to more than double from roughly 280,000 barrels a day to 600,000 by 2031 across three joint ventures.

Papa John's $PZZA ( ▼ 3.09% )  
CEO Todd Penegor told investors the turnaround is taking longer than he wanted, with US same-store sales down several quarters running. His fix starts with the pizza itself: how dough gets handled, how sweet the sauce is, how the cheese melts. The stock has been cut nearly in half this year.

Big Name Updates

Costco $COST ( ▼ 0.93% )  
expanded its Uber Eats tie-up to 47 states from 17, putting 600 warehouses on the app and letting people buy a membership without ever walking in. Bank of America kept its buy rating and trimmed the target to $1,095 from $1,200 on supply chain costs.

Booking Holdings $BKNG ( ▲ 0.02% )  
picked up an overweight rating and a $230 target from Morgan Stanley's Matthew Cost, who called it the best positioned name in online travel. The stock has been punished all year on fears that AI chat assistants will take its traffic.

Blue Chips
MarketBeat lists “7 Blue-Chip Stocks to Add To Your Forever Portfolio”

Expedia $EXPE ( ▼ 1.81% )  
went the other way at the same firm, cut to underweight on a weak risk-reward setup and more exposure to a softer consumer.

Other Notable Company News

Coinbase $COIN ( ▼ 4.44% )  
and Strategy $MSTR slipped after the Senate failed to advance the Clarity Act, the bill that would have set ground rules for digital assets.

Uber $UBER ( ▼ 0.66% )  
picks up Costco membership sales inside its app, plus discounts on Uber One for existing Costco members.

Brookfield Asset Management $BAM ( ▼ 1.42% )  
agreed to buy Australian plumbing supplier Reliance Worldwide in an all-cash deal.

Nvidia $NVDA ( ▲ 0.59% )  
traded higher as AI-linked names recovered from Monday and Tuesday's selling.

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Sector Watch

Bond Market

The dollar closed at its strongest since July 31, with the move arriving as Warsh spoke rather than when the decision crossed.

Not everyone read the day as a warning. Will Compernolle at FHN Financial pointed out that yields are barely above where they sat Tuesday and said the market looks content the Fed has credible resolve.

Policy Watch

Fed

The unanimous 12-0 vote is the part to notice. Three regional presidents dissented in July because they wanted higher rates, so getting everyone on the same page answers whether Warsh can hold a room.

The White House

Spokesman Kush Desai called the hike "rather unfortunate" on Fox News, arguing inflation is an energy supply shock that rates cannot fix. Warsh had already answered that one: the Fed cannot move any single price, but it can stop one price shock from spreading into everything else.

International

• Crude closed under $102 on a US inventory build, and the Saudi pipeline Iran hit is expected back within days.
  

• The European Union invited Canada to become its first associate member while Ottawa fights a trade war with Washington.

What to Watch

October Or December

The next two meetings are October 27 to 28 and December 8 to 9. Goldman Sachs Asset Management thinks they skip October because it lands days before the midterms, then move in December. Kay Haigh says that call hangs entirely on the next two inflation reports and where energy goes.

Diesel Into Winter

Bill Birmingham at REX Financial says another dollar on diesel over the winter would be genuinely bearish for the broad economy. Watch the weekly inventory numbers and whether that Saudi pipeline reopens on schedule.

Thanks for reading - you are now the more informed 🙂

- John

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