Stocks Narrowly Mixed Ahead of FOMC Decision

The S&P 500 Index ($SPX) (SPY) today is up +0.04%, the Dow Jones Industrials Index ($DOWI) (DIA) is up +0.48%, and the Nasdaq 100 Index ($IUXX) (QQQ) is down -0.12%.  September E-mini S&P futures (ESU25) are up +0.03%, and September E-mini Nasdaq futures (NQU25) are down -0.18%. 

Stock indexes are mixed today as they await this afternoon’s results of the 2-day FOMC meeting that ends today.  Weakness in chipmakers is weighing on the broader market, with Nvidia down more than -2% after the Financial Times reported that the Cyberspace Administration of China, China’s internet watchdog, has instructed the country’s biggest companies to terminate orders for Nvidia’s RTX Pro 6000D chip. 

Today’s US housing news was weaker than expected and negative for stocks.  Aug housing starts fell -8.5% m/m to 1.307 million, weaker than expectations of 1.365 million.  Aug building permits, a proxy for future construction, unexpectedly fell -3.7% m/m to a 5.25-year low of 1.312 million, weaker than expectations of an increase to 1.370 million.

US MBA mortgage applications rose +29.7% in the week ended September 12, with the purchase mortgage sub-index up +2.9% and the refinancing mortgage sub-index up +57.7%.  The average 20-year fixed rate mortgage fell -10 bp to an 11-month low of 6.39% from 6.49% in the prior week.

The markets are expecting the Fed to cut the fed funds target range by 25 bp at the conclusion of today’s FOMC meeting.  However, the markets will focus on the Fed’s new quarterly interest rate projections, or dot plot, to see if policymakers’ expectations match market projections for a total of about 70 bp in rate cuts by year’s end.   

The markets this week will continue to focus on any fresh trade or tariff news.  Later today, the FOMC is expected to cut the federal funds rate target by -25 bp to 4.00%-4.25% from 4.25%-4.50%, the Fed will release quarterly interest rate projections, and Fed Chair Powell will deliver post-FOMC meeting comments.  On Thursday, weekly initial unemployment claims are expected to fall by -23,000 to 240,000.

The markets are pricing in a 100% chance of a -25 bp rate cut and a 7% chance of a -50 bp rate cut at today’s conclusion of the Tue/Wed FOMC meeting.  After the fully expected -25 bp rate cut at today’s meeting, the markets are discounting an 86% chance of a second -25 bp rate cut at the next FOMC meeting on Oct 28-29.  The markets are pricing in an overall -69 bp rate cut in the federal funds rate by year-end to 3.64% from the current 4.33% rate.

Overseas stock markets today are mixed.  The Euro Stoxx 50 is down by -0.03%.  China’s Shanghai Composite closed up +0.37%.  Japan’s Nikkei Stock 225 closed down -0.25%.

Interest Rates

December 10-year T-notes (ZNZ5) today are up +2 ticks.  The 10-year T-note yield is down by -1.2 bp to 4.016%.  T-notes are slightly higher today on support from the weaker-than-expected US Aug housing starts and building permits reports.  T-notes also have support on expectations that the Fed will cut interest rates by at least -25 bp at today’s conclusion of the 2-day FOMC meeting.

Concerns about Fed independence are negatively impacting T-note prices due to President Trump’s attempt to fire Fed Governor Cook and Stephen Miran’s intention to hold a Fed Governor position while remaining technically in his White House role on the Council of Economic Advisors.

European government bond yields are moving lower today.  The 10-year German bund yield is down -1.9 bp to 2.674%. The 10-year UK gilt yield is down -2.1 bp to 4.618%.

Eurozone Aug CPI was revised lower to +2.0% y/y from the previously reported +2.1% y/y.  The Aug core CPI was left unrevised at +2.3% y/y. 

UK Aug CPI was unchanged from July at +3.8% y/y, right on expectations.  Aug core CPI eased to +3.6% y/y from +3.8% y/y in July, right on expectations.

Swaps are discounting a 2% chance for a -25 bp rate cut by the ECB at its next policy meeting on October 30.

US Stock Movers

Nvidia (NVDA) is down more than -2% to lead losers in the Nasdaq 100 and Dow Jones industrials after the Financial Times reported that the Cyberspace Administration of China, China’s internet watchdog, has instructed the country’s biggest companies to terminate orders for Nvidia’s RTX Pro 6000D chip.  Other chip makers are also sliding on the news, with Intel (INTC), Broadcom (AVGO), ASML Holding NV (ASML), and Advanced Micro Devices (AMD) down more than -1%.

Manchester United (MANU) is down more than -4% after reporting a Q4 loss and cutting its 2026 revenue outlook. 

Duolingo (DUOL) is down more than -4% after the Hungarian Competition Authority said it has opened a probe into the company’s practices.

Uber Technologies (UBER) is down more than -3% to lead losers in the S&P 500 on signs of insider selling after an SEC filing showed CEO Khosrowshahi sold $28.6 million of shares last Friday.

Progressive Corp (PGR) is down more than -1% after BMO Capital Markets downgraded the stock to market perform from outperform. 

Roivant Sciences Ltd (ROIV) is up more than +12% after it said its brepocitinib, which it developed with Priovant Therapeutics to treat dermatomyositis, met its primary endpoint in a Phase 3 trial. 

Workday (WDAY) is up more than +8% to lead gainers in the S&P 500 and Nasdaq 100 after Guggenheim Securities upgraded the stock to buy from neutral with a price target of $285.

Zillow Group (ZG) is up more than +4% after Bernstein upgraded the stock to outperform from market perform with a price target of $105. 

MasTec (MTZ) is up more than +2% after Wolfe Research upgraded the stock to outperform from peer perform with a price target of $227.

Vistra Corp (VST) is up more than +1% after Daiwa Securities upgraded the stock to buy from hold with a price target of $250. 

Earnings Reports(9/17/2025)

Cracker Barrel Old Country Store (CBRL), General Mills Inc (GIS).