September 17th Market Overview

Happy Wednesday

Fed cut rates for the first time this year and markets still weren't happy. Powell called it "risk management for the job market" instead of signaling more cuts ahead, which disappointed traders expecting aggressive easing.

China banned its tech companies from buying Nvidia chips.

Classic case of getting what you asked for but not how you wanted it delivered.


Let's dig in...

Today’s Big Picture

Fed Cuts Rates But Stays Cautious

Fed lowered rates by a quarter point to 4-4.25% in an 11-1 vote, with Stephen Miran as the only dissenter pushing for a bigger cut. Powell called this "risk management" rather than aggressive rate cutting, disappointing traders who wanted signals of deeper cuts ahead. Fed officials' projections show two more cuts this year but only one in 2026.

Powell said the central bank's focus has shifted from fighting inflation to protecting jobs as hiring slows.

China Bans Nvidia AI Chips

China's internet regulator ordered major tech companies including ByteDance and Alibaba to stop buying Nvidia's AI chips and cancel existing orders. This escalates the tech conflict between Washington and Beijing as China pushes its companies to use domestic semiconductors instead of American ones. The move hits Nvidia hard, China represents a huge chunk of global AI chip demand.

Housing Stays Weak Despite Cheaper Mortgages

New home construction dropped 8.5% to 1.307 million in August while building permits fell 3.7% to 1.31 million, both missing expectations. This happened even as mortgage rates hit three-year lows of 6.13%, showing the housing market faces deeper problems than just expensive borrowing costs.

Market Overview

U.S. Stock Indexes

Stock Spotlight

Nvidia $NVDA ( ▼ 2.63% ) 
took the biggest hit from China's AI chip ban, which specifically blocks its RTX Pro series that major Chinese companies were buying. The company tried to offset bad news by announcing $30 billion in UK investments.

Workday $WDAY ( ▲ 7.17% ) jumped after billionaire activist Paul Singer's Elliott Management revealed a $2 billion investment in the software company. Workday sweetened the deal by announcing it will buy back $4 billion of its own shares.

Lyft $LYFT ( ▲ 13.55% ) 
struck its first self-driving car deal, partnering with Google's Waymo to launch robotaxis in Nashville next year.

Zillow $Z ( ▲ 2.85% ) 
Wall Street firm Bernstein upgraded the stock and set a $105 price target, betting the real estate platform will benefit as lower mortgage rates bring more buyers and sellers back to the housing market.

Big Name Updates

Apple $AAPL ( ▲ 0.34% ) 
faced trouble in China where smartphone sales dropped 6% compared to last year, even with the iPhone 17 launch approaching. Apple only holds 12% of the Chinese market and ranks sixth place as local brands like Xiaomi and Vivo win over consumers with cheaper alternatives.

Microsoft $MSFT ( ▲ 0.08% ) 
announced its biggest international investment ever, committing $30 billion to the UK through 2028. Half of that money will build data centers and cloud computing facilities, including what will become Britain's largest supercomputer using over 23,000 graphics processing chips.

Alibaba $BABA ( ▲ 2.41% ) 
landed China Unicom as a customer for the AI chips it designs through its semiconductor division. Getting China's second-largest phone company to buy its chips.

Walmart $WMT ( ▲ 1.57% ) 
hit new all-time highs after Bank of America analysts raised their price target, praising the retailer for using artificial intelligence better than competitors to manage inventory and predict what customers want to buy.

Other Notable Company News

Oracle $ORCL ( ▼ 1.81% )
stands to benefit from the TikTok deal getting extended to December 16th. The proposed structure would give Oracle and other American investors control of 80% of TikTok's US operations while China's ByteDance keeps less than 20%.

Baidu $BIDU ( ▲ 9.91% ) 
got upgraded to Buy by Jefferies analysts who think the Chinese search company will make good money selling AI chips and cloud computing services as China builds out its artificial intelligence capabilities.

Sector Watch

Bond Market

The 10-year Treasury yield ended at 4.065% after some back-and-forth following the Fed announcement. Yields dropped when the cut was announced, then bounced back as Powell's cautious tone sank in.

• Mortgage rates fell to 6.13%, the lowest in three years

Policy Watch

Powell said the Fed has switched from worrying about rising prices to worrying about people losing jobs. He noted hiring has slowed and unemployment could start climbing. The Fed admitted the economy is cooling down while prices are still rising faster than they'd like.

• Stephen Miran was the only Fed member who wanted a bigger rate cut in his first meeting as Trump's economic adviser

• Fed officials can't agree on how many rate cuts to make next year - some want more, others want fewer

• The Fed plans two more quarter-point cuts this year at their October and December meetings
  

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What to Watch

October Jobs Report

The employment data will be crucial for the Fed's next move. Any signs of accelerating job losses could push the central bank toward more aggressive cuts, while stable employment might keep them on the current measured pace.

China Tech Escalation

Beijing's chip ban on Nvidia could expand to other US semiconductor companies. Watch for potential retaliation from Washington and how American tech companies adjust their China exposure and supply chains.

Housing Market Response

With mortgage rates at three-year lows but construction still weak, monitor pending home sales and builder confidence to see if lower borrowing costs can finally jumpstart activity in the sector.

Thanks for reading 🙂

- John