Fed’s split outlook leaves Markets on edge 18/09/2025

HOT stories for today

US market wrap:

• Markets fluctuated on Wednesday after the Fed, as expected, lowered its benchmark rate by 0.25%. The Dow climbed 260.42 points (0.57%), while the S&P 500 dipped 0.1% and the Nasdaq slid 0.33%. Fed Chair Jerome Powell, describing the move as “risk management,” tempered expectations for a prolonged easing cycle.
• Policymakers now see two more cuts in 2025 but just one in 2026, compared with traders’ bets on two to three next year. Seven of 11 sectors finished higher, with financials ($XLF 0.97%) leading, industrials ($XLI  0.45%) lagging, and energy showing modest strength.

Fed’s split outlook leaves Markets on edge

• The Fed cut rates by a quarter point on Wednesday, but the bigger story was its muddled guidance. Chair Jerome Powell described the move as a “risk-management cut,” signaling growing concern about labor-market weakness even as he tried to project confidence in the economy.
• Officials now see three cuts in 2025 but only one in 2026, a projection that highlights deep divisions within the committee. Analysts say the lack of consensus leaves markets uncertain, with futures still pricing in two reductions this year, though the odds are seen as far from guaranteed. Powell acknowledged that inflation risks remain, including from tariffs, but stressed that the greater threat is a downturn in hiring. Economists warn that the Fed’s mixed message, balancing inflation concerns against labor-market fragility, will keep markets volatile and data-dependent heading into the October and December meetings.

Stocks on the move:

• Lyft (LYFT): Shares jumped 13% after the company announced riders will soon be able to book Waymo robotaxis directly through the Lyft app, with service slated to launch next year.
• Walmart (WMT): The retail heavyweight rose 2% after Bank of America raised its price target. Analyst Robert Ohmes pointed to Walmart’s growing role as a leader in retail-focused artificial intelligence.
• American Express (AXP): The credit card issuer advanced 2.7%, making it the top performer in the Dow Jones Industrial Average. Gains came ahead of the Fed’s anticipated rate cut. Visa (V) and Mastercard (MA) also traded higher.
• Nvidia (NVDA): The AI chip leader slipped 3% after the Financial Times reported that China’s internet regulator barred major domestic tech firms from purchasing its processors. Advanced Micro Devices (AMD) also lost over 1% in sympathy.

Watchlist: TSLA, LYFT, NVDA, JPM, AAPL, RDDT, DRI, CBRL

Today’s action

• Asia-Pacific markets traded mixed on Thursday after the Fed’s widely expected rate cut. Japan’s Nikkei 225 surged 1.13% to a new record, boosted by real estate and tech stocks. Hong Kong’s Hang Seng Index slipped 0.17% and China’s CSI 300 declined 0.23%.
• U.S. futures edged higher overnight as investors digested the Fed’s decision: S&P 500 futures and Nasdaq 100 futures each rose 0.2%, while Dow Jones Industrial Average futures gained 50 points, or 0.1%. In extended trading, Cracker Barrel Old Country Store (CBRL) tumbled after posting weaker-than-expected fourth-quarter results. On the economic calendar, investors will watch for weekly jobless claims and the Philadelphia Fed manufacturing index.

Bitcoin

• Bitcoin (BTC $117,535) is struggling to maintain levels above $115,000 following the Fed’s 25-basis-point rate cut, which lowered the benchmark range to 4.0%–4.25%. The central bank also signaled another 50 bps of easing through 2025.
• The crypto market’s initial response has been subdued, with traders weighing the Fed’s cautious messaging. BTC briefly slipped below $115,000 before attempting to hold its ground above that threshold on hourly closes. Meanwhile, Bitcoin futures open interest has climbed, even as spot trading volumes continue to taper off.
  Watchlist: Bitcoin: 99 000-125 000, Ethereum: 4000-4980, Solana: 160-214

Forex

• EUR/USD is flat near 1.1815 in Asian trade after the Fed’s 25-bps rate cut, with traders awaiting ECB President Lagarde’s speech later Thursday. The dollar steadied after touching a 3.5-year low.
• The yen (JPY) extends losses versus the dollar, pressured by weak Core Machinery Orders and political uncertainty that could delay BoJ tightening. Risk-on sentiment is also weighing ahead of the BoJ’s two-day meeting.
  Watchlist: EUR/USD: 1.0700-1.1880, USD/JPY: 140-151

Basic Materials

• Gold (XAU/USD) is consolidating near record highs above $3,700 after the Fed’s dovish rate cut signaled two more reductions this year. Geopolitical tensions in Ukraine and the Middle East are providing additional safe-haven support, though a modest USD rebound is limiting upside momentum.
• WTI crude (CL) trades around $63.60 in Asian hours, pressured by a build in U.S. distillate inventories that raised demand concerns. Still, supply risks from Russia and ongoing geopolitical strains may cushion the downside
  Watchlist: GOLD: 2600-3700, US Oil: 55.60-75.80

Key Economic Events Today:

EST time

08:30 am: USD Unemployment Claims
08:30 am: USD Philly Fed Manufacturing Index


Earnings

BMO (Before Market Open):

DRI                             Darden Restaurants
FDS                             Factset Research

AMC (After Market Close): FDX, LEN



The TEFS Analyst team wishes you a successful day!