All Eyes on the Fed and Warsh 16/09/2026
Market Wrap
U.S. stocks fell Tuesday as Treasury yields surged to multiyear highs and investors positioned for a pivotal Federal Reserve decision that could mark the start of a new tightening cycle.
The Dow Jones Industrial Average dropped 328 points, or 0.6%, to 52,093.11. The S&P 500 declined 0.5% to 7,585.73, while the Nasdaq Composite fell 0.8% to 25,981.57.
The 10-year Treasury yield climbed as high as 5.041%, its highest level since 2007, before easing back toward 5%. Rising yields continued to pressure equity valuations as markets prepared for Wednesday's Fed announcement.
Some AI-related stocks bucked the broader decline after coming under pressure a day earlier. Coherent (COHR) gained nearly 2%, Advanced Micro Devices (AMD) rose 2% and Qualcomm (QCOM) advanced more than 4%.
Oil remained another source of inflation pressure following Saudi Arabia's closure of a key pipeline bypassing the Strait of Hormuz. Brent crude remained above $105 a barrel, while West Texas Intermediate traded above $101.
Attention now turns firmly to the Fed. Futures markets are pricing in a 92% probability of a 25-basis-point rate hike Wednesday, with investors focused not only on the decision but also on signals about the path of rates over the coming months.
U.S. stock futures edged higher early Wednesday as traders positioned for the announcement, which comes as the central bank also faces pressure from the White House to keep rates unchanged.
Fed Decision Could Signal the Start of a New Hiking Cycle
Investors are bracing for Wednesday's Federal Reserve decision, but the bigger question for markets is no longer whether rates will rise — it is what comes next.
Futures markets are pricing in a 92.5% probability of a quarter-point increase, which would lift the federal funds target range to 3.75%-4%. With a hike largely expected, attention will shift to the Fed's economic projections and Chair Kevin Warsh's press conference for clues on whether this is a limited adjustment or the beginning of a broader tightening cycle.
Markets may be able to absorb one or two increases as policymakers respond to persistent inflation. A more aggressive path of three or more hikes, however, could put renewed upward pressure on Treasury yields and weigh on equities, particularly high-growth technology, cyclical and rate-sensitive stocks.
The opposite outcome carries risks as well. Some strategists warn that leaving rates unchanged while signaling a later hike could push longer-term yields higher if investors question the Fed's commitment to controlling inflation.
With the 10-year Treasury yield already around 5%, Wednesday's message on the future path of rates could ultimately matter more for markets than the rate decision itself.
Stocks on the Move
- Skyworks Solutions (SWKS) and Qorvo (QRVO): Shares rebounded from the previous session's AI-related selloff, with Skyworks jumping 10% and Qorvo gaining 7%.
- Axon Enterprise (AXON): Shares fell 9% after the Taser maker announced plans to sell $1 billion of convertible senior notes.
- Revvity (RVTY): Shares climbed 7% to a fresh 52-week high after management provided an upbeat outlook at Baird's healthcare conference. The life-sciences company highlighted a strong second-quarter backlog, with delayed orders expected to ship during the third and fourth quarters.
- Dave & Buster's Entertainment (PLAY): Shares plunged 17% after second-quarter results missed expectations. Revenue came in at $544.1 million versus the $556.8 million consensus, while adjusted EBITDA of $98.9 million fell well short of the $120.4 million expected. The company also posted an unexpected adjusted loss of 27 cents per share.
- Crypto-Linked Stocks: The sector came under pressure ahead of a Senate vote on the Clarity Act, which aims to establish a regulatory framework for the crypto market. Coinbase (COIN) dropped more than 5%, Riot Platforms (RIOT) fell 4% and Strategy (MSTR) lost 3%, alongside a decline in Bitcoin (BTC).
Watchlist: USO, COIN, NVDA, META, DELL, ORCL, SNDK, MU, CVX, APA
Key Economic Events Today
Economic Data (EST)
- 08:30 AM — USD Retail Sales, Core Retail Sales
- 08:30 AM — USD Import Prices
- 10:00 AM — USD Business Inventories
- 10:00 AM — USD NAHB Housing Market Index
- 10:30 AM — USD Crude Oil Inventories
- 02:00 PM — USD Federal Funds Rate Decision
- 02:30 PM — USD FOMC Press Conference
Earnings
Before Market Open: LuxExperience (LUXE), Ispire Technology (ISPR)
After Market Close: Lennar Corp. (LEN), Seabridge Gold (SA)
