September 17th Market Overview

Happy Friday

The Fed announced raised rates yesterday and everything sold off a bit. Today we got some of it back.

Cheaper oil, softer yields, and the chip names doing the heavy lifting.

My read is simple: people slept on it and woke up thinking they overreacted, everyone knew this was coming for at least 2 weeks.

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

Let’s dig in...

Today's Big Picture

1. The Gap Between The Fed And The Market

Futures traders are priced for three more quarter-point hikes over the next twelve months, according to LSEG data. The Fed's own dot plot shows one more this year and a median of nothing in 2027. Jefferies economist Mohit Kumar said the market simply overread Warsh's tone on Wednesday and spent Thursday walking it back. That gap is where the volatility lives between now and December.

2. Crude Cooled, Diesel Did Not

Saudi Arabia is moving extra cargoes to Asian refiners through ship-to-ship transfers near Oman's Sohar port, which took the fear premium out of Brent and pulled it back under $104. Diesel went the other way and set a national record at $6.39 a gallon. California is above $8.34. Cheaper crude takes weeks to reach the pump, and diesel is the fuel that prices freight, food, and construction.

3. Memory Is The New Bottleneck

Intel CEO Lip-Bu Tan said memory shortages get worse in 2027, and that prices have already climbed five to seven times over. That lifted Micron $MU and the rest of the chip tape. Barclays strategist Venu Krishna flagged the other side of it: Apple blamed its recent gross margin squeeze entirely on memory costs, and that same bill lands on every chip buyer next year. Good news for the sellers, a 2027 earnings problem for the buyers.

Market Overview

Index Performance

Stock spotlight

Generac $GNRC ( ▲ 17.8% )  
signed a deal to supply Amazon with up to $8 billion of backup generators for its data centers, with $2.4 billion of that landing across 2027 and 2028. Amazon also took warrants to buy 1.69 million shares at $200.93. Power is the binding constraint on AI buildouts right now, and a home generator company just became an AI infrastructure name.

Lennar $LEN ( ▼ 0.14% )  
earned $1.19 a share against the $1.28 analysts wanted, on $8.05 billion in revenue. That is roughly half what it earned this time last year. The company cut its full-year delivery target and pointed straight at mortgage rates.

Fluence Energy $FLNC ( ▼ 14.31% )  
cut full-year revenue guidance to $2.4 billion from a range that topped out near $3.1 billion, blaming production problems at its Houston plant. It now expects to lose $200 million on an operating basis where it previously guided to roughly breakeven.

Big name updates

Microsoft $MSFT ( ▲ 1.0% )  
raised its quarterly dividend to 98 cents, payable December 10. Morgan Stanley kept its overweight rating and $600 target, calling the raise consistent with earnings growth.

Salesforce $CRM ( ▼ 2.68% )  
spent its investor day pitching AI agents as the new front end for enterprise software. Citi analyst Tyler Radke called it an interface revolution. The stock finished lower anyway.

Costco $COST ( ▼ 0.2% )  
will now deliver from all of its US locations through DoorDash, days after Uber widened its own Costco partnership from 17 states to 47.

ExxonMobil $XOM ( ▼ 0.17% )  
is close to a preliminary deal to explore investments in several Venezuelan oil fields, nearly two decades after it walked out of the country.

Meta $META ( ▲ 0.66% )  
could save about $8.5 billion in 2027 by running its own AI chips instead of buying them, per Bank of America's estimate.

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

Other notable company news

Diamondback Energy $FANG ( ▲ 0.93% )  
kept sliding after its largest shareholder sold nearly $2 billion of stock on Tuesday.

CoreWeave $CRWV ( ▼ 4.12% )  
plans to issue $3 billion of convertible notes due 2033, with an option for another $500 million.

Applied Materials $AMAT ( ▲ 0.2% )  
is putting $5 billion into semiconductor manufacturing in India.

Arm $ARM ( ▲ 7.08% )  
CEO Rene Haas said he is more confident than he was in July about locking down supply for $2 billion of demand for the company's new AGI CPU

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Sector Watch

Bond market

The 10-year yield fell back under 5, giving up most of Wednesday's move, with the 30-year near 5.35 and the dollar index easing after a strong session. Analysts credited cheaper oil more than anything the Fed said.

Households feel it in the mortgage. Freddie Mac put the 30-year fixed at 6.95 this week, up from 6.76, the highest since January 2025. Pending home sales were up slightly from July and down from a year ago.

Policy watch

Fed

Trump called the hike a raise against him personally and said US rates should be one percent or less because America is the best credit in the world. He also said he told Warsh to do what he wants and that he wants the chair independent. Jamie Dimon was more direct on the underlying question: he is not convinced inflation has been beaten.

Trade and tariffs

• Congress passed a bill giving Trump authority to impose 100 percent tariffs on the five largest buyers of Russian oil and gas. It goes to his desk next.

• The administration banned Canadian goods from federal government purchases. Mark Carney responded by pushing for closer Canada and EU ties, and Trump threatened serious tariffs over it.

Regulation

The SEC cleared a path for licensed venues to trade tokenized stocks, waiving rules that had blocked it. The exemptions are effective now and run five years. Securitize and Bullish both rallied on the news. It arrives right after the Clarity Act failed in the Senate, and Coinbase CEO Brian Armstrong said the company will now pursue rules through regulators instead of Congress.

International

• The Bank of England held at 3.75 in a 6-3 vote. Governor Andrew Bailey said high energy costs have not moved UK wages or prices much yet, but that changes if they stay high.

• Reuters reported China privately asked Iran to help rein in Yemen's Houthis after Saudi Arabia appealed to Beijing.

What to Watch

Bank Of Japan, Friday

A hike would put all four major central banks in tightening mode at once. Japan has been the world's last reliable source of cheap funding, and that matters for global bond yields.

Diesel And A Possible Export Ban

GasBuddy's Patrick De Haan sees diesel near $6.60 within days, past the inflation-adjusted 2022 peak. SoFi strategist Liz Thomas puts high odds on an export ban announcement before the midterms. That would be a headline risk for refiners.

The Saudi Pipeline Timeline

Half the East-West capacity is expected back within days and full service in roughly six weeks. That schedule is what is holding oil down right now. Any slippage moves the whole energy complex back the other way.

Thanks for reading - you are now the more informed 🙂

- John

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