Morning in New York: focus on Fed signals

Daily review and forecast of events on the U.S. stock market from Mikhail Denislamov, Deputy Director of Freedom Capital Markets Research.

The main macroeconomic event on September 17 is the summing up of the results of the two-day meeting of the Federal Reserve System. Most forecasts suggest that the regulator will revise the key rate for the first time this year and reduce it by 25 bp. Due to the fact that this decision will be quite expected, the most interesting for investors will be the regulator's signals about the prospects of further adjustment of the monetary policy. Fed Chairman Jerome Powell's comments at the final press conference and the updated macroeconomic forecasts, including the dot plot, are of great importance for the formation of market expectations. Freedom Broker's forecast suggests that changes in the Fed's gaidens compared to June will be insignificant. The benchmark interest rate trajectory is likely to be revised to 3.8% in 2025 and 3.4% in 2026. The core inflation forecast for this year may be raised to 3.2% y/y. Freedom Broker analysts expect three rate cuts in 2025 and two in the first half of 2026. Historically, when the Fed begins easing policy when the S&P 500 is near its highs, medium-term stock returns are positive, despite possible short-term volatility in the first month.

As part of Donald Trump's visit to the UK, a "technological prosperity deal" was announced involving cooperation in the development of AI solutions and quantum technologies, as well as partnerships in nuclear energy. The arrangements are expected to lead to $42.3 billion worth of investment in the British economy by US tech giants including Microsoft, Nvidia, Google and OpenAI. Specifically, Microsoft plans to invest more than $30 billion in projects in the United Kingdom over the next four years.

General Mills (GIS) will report quarterly results before the open of trading.

Futures on US indices are showing near-zero dynamics. We assess the balance of risks as neutral with high volatility on the background of the Fed meeting and Jerome Powell's press conference. We focus on S&P 500 fluctuations in the range of 6540-6670 points (from 1% to +1% of the previous session's closing level).

- Semiconductor test equipment maker Cohu (COHU) raised its revenue forecast for high-bandwidth memory (HBM) test solutions, indicating strong demand in this segment closely tied to AI development. On the pre-market, the stock is showing strong gains.

- J.P. Morgan Chase (JPM) raises quarterly dividend, which indicates the confidence of its management in financial stability. The decision was positively perceived by investors: quotes of the financial corporation before the opening of the main session are trading in a slight plus.

- GSK (GSK) has announced a $30 billion investment in the U.S. economy over the next five years. The funds will be used for research, development and expansion of production facilities. The company's shares reacted to the news with moderate growth.

September 16 trading on American stock exchanges ended with a slight decline. S&P 500 lost 0.13%, Nasdaq 100 fell by 0.08%, Dow Jones corrected by 0.27%, Russell 2000 - by 0.09%. Representatives of the "Magnificent Seven" showed multidirectional dynamics: shares of Tesla (TSLA) rose by 2.82%, securities of Nvidia (NVDA) fell by 1.61% due to accusations from China in violation of antimonopoly legislation. The energy sector (XLE: +1.68%) led the growth, while utility providers (XLU: -1.82%) were the outsiders.

Retail sales for August increased by 0.6% mom, which was three times higher than consensus. The figure excluding auto sales, which is considered a more accurate indicator of consumer spending, increased by 0.7% m/m against expectations of 0.4%. This data indicates the continued resilience of consumption, however, according to economists, this is unlikely to change the September Fed rate decision, although it may reduce the assessment of the likelihood of more active easing of the MPC.

Industrial production in August increased by 0.1% mom, although it was forecasted to decrease by the same amount. The positive dynamics was due to the recovery in the mining sector and an increase in the output of automobiles. At the same time, the utilities sector recorded a significant decline. Capacity utilization remained at 77.4%, which was in line with expectations.

- Webtoon Entertainment (WBTN: +39%) shares soared after announcing a partnership with Disney (DIS) to develop a new digital comics platform. The agreement also calls for Disney to acquire 2% of Webtoon.

- An optimistic outlook for the third quarter, which included above-consensus earnings guidance, supported Steel Dynamics (STLD: +6.2%). The company noted strong shipment volumes and widening steel spreads.

- Fourth-quarter results that beat earnings and revenue consensus drove Ferguson Enterprises (FERG: +8%) shares higher. The company reported market share expansion and strength in its U.S. business segment.

- Dave & Buster's Entertainment (PLAY: -16.7%) shares fell sharply after a disappointing second-quarter report in which earnings, revenue and comparable sales missed forecasts. Management acknowledged operational errors that led to a lack of customer awareness of the company's offerings.

- Hims & Hers Health (HIMS: -5.7%) shares were pressured by a warning from a specialized regulator that accused the company of posting false information on its website.

This article was AI-translated and verified by a human editor