U.S. stocks closed lower on September 17 after the Federal Reserve raised interest rates by 25 basis points, with the three major indices opening higher but finishing in negative territory. Fed Chair Warsh emphasized that inflation has been "too high for too long," signaling a hawkish stance that weighed on market sentiment.
In pre-market trading, Intel shares climbed over 4% on plans to collaborate with SK Hynix on domestic memory chip production, while attention also turned to Apple's reported discussions with Nvidia regarding network interconnect technology for a potential return to the server market.
Among popular Chinese stocks, results were mixed: Trip.com rose over 3%, Baidu fell over 2%, and Bilibili dropped over 3%. European shares advanced as bond yields and oil prices eased, with investors positioning ahead of the Fed's decision.
This marks the Fed's first rate hike in three years, approved unanimously, with Chair Warsh noting inflation persistence as a key driver. The accompanying dot plot suggests one more increase this year, though President Trump reiterated his view that U.S. rates should be at 1% or lower, calling the decision "quite regrettable" via a White House spokesperson.
Foreign holders of U.S. Treasuries, including China and Belgium, reduced their positions, adding to global bond market pressure. Elsewhere, Brazil's central bank cut its benchmark rate by 25 basis points to 13.75%, though election uncertainty clouds the future policy path.
In corporate news, Goldman Sachs' CEO cautioned about weaker fixed income trading performance and higher overall expenses. Deutsche Bank and KPMG economists argued the Fed's move signals the start of a tightening cycle. Additionally, Anthropic faces scrutiny over whether its Claude AI is too human-like to manage, while Reddit's co-founder criticized tech's "slow" response to AI misinformation. Amazon raised its minimum hourly wage for full-time core operations staff in the U.S. to $20.
The S&P 500 fell following Warsh's hawkish remarks, while short-term U.S. Treasuries came under pressure as traders bet on further hikes. Brent crude declined on signs that some Middle East supply disruptions are easing, and the dollar strengthened as Warsh reiterated his commitment to price stability. The 2-year Treasury yield hit a two-year high, reflecting expectations for additional tightening.
The dot plot indicates the market's pricing for this year is met, yet the Fed's hawkish tilt boosts credibility, which is favorable for bonds, according to a former vice chair. Pimco's global economic advisor emphasized the significance of the unanimous decision.
Saudi Arabia aims to restore half of the capacity of its disrupted pipeline within days, while Iran secured a seat on the IAEA General Committee despite U.S. opposition. European bonds saw short-dated U.K. gilts lead gains as markets awaited both Fed and Bank of England decisions. Wall Street bull Yardeni turned cautious, cutting his S&P 500 target to 7900 points.
A U.S. Defense Department official noted that artificial intelligence companies are underinvesting in safety measures. European bond yields and oil retreated as stocks rallied, with the market now focused on the Fed's next moves.