Fed Rate Cut Looms Amid Mixed Signals; Webtoon Soars on Disney Deal; Land Rover Hit by Cyberattack
Market Snapshot
- The S&P 500 closed at 6,606.76, down 0.13% on 16 September, after hitting a fresh intraday record earlier in the session.
- The Dow Jones Industrial Average closed at 45,758, down 0.27%.
- The Nasdaq Composite closed at 22,334, down 0.07%.
- The 10-Year US Treasury yield stood at 4.028%.
Federal Reserve and Economic Outlook
Global markets are anticipating the U.S. Federal Reserve’s latest monetary policy decision, with a 0.25 percentage point interest rate cut widely expected and almost fully priced in by investors. The decision comes amid cooling inflation, with the August Consumer Price Index (CPI) at 2.9% year-on-year, giving the central bank scope to act.
Recent economic data presents a mixed picture. The labour market has shown clear signs of deterioration, with the August jobs report showing a significant slowdown of only 22,000 new payrolls and unemployment rising to 4.3%. Previous data has also seen significant downward revisions. This has led some to argue for a more aggressive 0.50 percentage point cut to stimulate the economy and support the Fed's mandate of maximum employment. However, consumer spending appears resilient, with US retail sales rising 0.6% in August, beating forecasts. This resilience is set against a backdrop of increasing financial pressure, as national average FICO credit scores saw their steepest decline since 2009 due to more borrowers falling behind on loans.
The market’s reaction will be heavily influenced by the tone of Fed Chair Jerome Powell’s subsequent press conference and the Fed's economic projections. Investors will scrutinise his commentary for signals on the future path of rate cuts. Attention will also be on newly confirmed Governor Stephen Miran and whether he dissents from the majority decision.
US Housing Market Outlook
The prospect of a Federal Reserve rate cut has boosted confidence among U.S. homebuilders, with sales expectations reaching a six-month high. The optimism is driven by hopes that lower interest rates will translate into reduced mortgage costs for buyers, which have already dipped to their lowest levels since last autumn.
However, significant headwinds remain. The National Association of Home Builders’ confidence index remained pessimistic in September, and a record 39% of builders have cut prices to attract buyers. Sceptics argue that Fed cuts primarily affect short-term rates, not the long-term ones that drive mortgages. Furthermore, a fundamental supply shortage persists, exacerbated by a "golden handcuffs" effect where over 90% of current homeowners have mortgage rates below 6%, discouraging them from selling. This lack of inventory could mean that any increased demand from lower rates may simply push record-high home prices even higher, offsetting affordability gains.
Corporate and Sector Updates
Corporate Stocks in the News
Webtoon (WBTN) shares rallied over 35% after announcing a deal with Disney to create digital comics for the Marvel and Star Wars franchises, with Disney also taking a 2% stake in the company. Conversely, Hims and Hers (HIMS) shares fell after the U.S. Food and Drug Administration (FDA) issued a warning about its compounded weight-loss drugs not being FDA-approved. This news boosted shares in competitors Novo Nordisk and Eli Lilly.
In public market news, event ticket seller StubHub priced its initial public offering at $23.50 per share, valuing the company at $8.6 billion. It will trade under the ticker STUB on the New York Stock Exchange.
Elsewhere, freelance marketplace Fiverr (FVRR) announced it is cutting 30% of its workforce, around 250 employees, as it pivots to become an "AI-first" company. Microsoft ($MSFT) increased its quarterly dividend by 10% to $0.91 per share, and Target ($TGT) announced it will roll out next-day delivery to over half the US population to better compete with Amazon and Walmart.
UK and European Industry Developments
A major cyberattack in the United Kingdom has forced Land Rover to shut down three of its factories, impacting 33,000 employees and halting the assembly of up to 1,000 vehicles per day for over two weeks.
In more positive UK news, several major technology firms pledged investments totalling over $40 billion. Microsoft plans to spend $30 billion on AI infrastructure, with Nvidia, Google, OpenAI, and Salesforce also committing multi-billion dollar investments. In Germany, Ford announced plans to cut up to 1,000 jobs at its Cologne electric vehicle plant, citing lower-than-expected demand for battery-powered cars.
US Consumer and Regulatory Trends
American consumers are shifting their eating habits amid record-high beef prices, which jumped 12.8% in August. The U.S. Department of Agriculture projects chicken consumption will reach a record 102.7 pounds per person this year, boosting profits for producers like Tyson Foods. Footwear prices are also climbing, with a 1.4% year-over-year increase in August noted as the largest in 17 months, largely attributed to rising tariffs on imported shoes.
On the regulatory front, President Trump has renewed a push to scrap mandatory quarterly earnings reports in favour of semi-annual disclosures. Proponents claim this would save money and allow for better long-term corporate focus, but critics warn it could reduce transparency and increase market volatility for retail investors.
Global Developments and Trade
President Trump has once again extended the deadline for ByteDance to divest TikTok’s U.S. operations, pushing the new date to December. The fourth extension follows reports of a “framework” deal for TikTok’s U.S. arm to be owned by an investor consortium including Oracle, Silver Lake, and Andreessen Horowitz, with ByteDance retaining a 20% stake. Separately, it was reported that China has banned its domestic companies from using Nvidia's chips, potentially adding friction to trade talks.
In other developments, the Trump administration has directed Delta Air Lines to terminate its joint venture with Aeromexico over competition concerns. In Asia, Japan's exports showed a smaller-than-expected decline of 0.1% in August, while China continues to maintain tight control over its rare earth mineral exports.
Technology and Digital Assets
Google has launched an open-source protocol, in partnership with Coinbase and others, to enable its AI agents to process payments, including stablecoins. The initiative aims to allow personalised AI agents to securely make purchases on behalf of users. The move comes as the Bank of England is proposing limits on the amount of stablecoins individuals and institutions can hold, citing financial stability concerns.
In other news, a futures-based Dogecoin ETF could debut in the US this week, potentially becoming the first U.S. ETF centred on a memecoin. At its annual Connect event, Meta is set to unveil its most advanced smart glasses to date, internally called Hypernova, as the company shifts its metaverse focus.
NOTE: This content is for informational and educational purposes only and does not constitute financial advice. Always do your own research. Not financial advice (NFA).