MARKET WRAPS
STOCKS: Stocks fell after the Federal Reserve raised interest rates for the first time in three years.
TREASURYS: Treasury yields were mostly higher after the Fed rate increase.
FOREX: The U.S. dollar rose as traders bet that there would be more rate increases in the months ahead.
COMMODITIES: Oil futures fell amid hopes that Saudi Arabia would soon reopen a pipeline damaged by Houthi attacks.
HEADLINES
Fed Delivers First Rate Hike in Years With Unanimous Vote
WASHINGTON-The Federal Reserve raised interest rates Wednesday for the
first time in three years, a sharp reversal that began taking back cuts
it made last year and implicitly undercut the White House's insistence
that inflation isn't a concern.
The increase, approved unanimously, will raise the benchmark
federal-funds rate range by a quarter point to between 3.75% and 4%. The
vast majority of officials penciled in one more hike this year in
interest-rate projections released after their meeting.
U.S. Retail Sales Rebound in Show of Consumer Strength
Sales growth at U.S. retailers rose in August, rebounding from its
decrease in July, the Commerce Department said.
Retailers' sales rose by 1.2% last month to $773.9 billion, versus the
0.5% decrease recorded in July. The August reading was higher than the
0.8% increase economists polled by The Wall Street Journal expected.
Retail sales numbers are recorded in nominal terms and account for the
total number of dollars spent. In August, Americans were still paying
high prices for gasoline.
EU Chief Backs Canada's Push to Become Bloc's First Associate Member
The European Union's top official said she would work to make Canada
the bloc's first associate member, a major shift indicative of the new
ties traditional U.S. allies are forging with each other in the face of
hostility from the Trump administration.
European Commission President Ursula von der Leyen said Europe needed
to tighten its cooperation with like-minded democracies, in particular
Canada, to retain the continent's sovereignty and tackle threats from
what she called "an openly hostile world."
The landmark speech at the European Parliament in Strasbourg, France,
signaled that the notoriously bureaucratic 27-member bloc, threatened by
Russia to its east and an increasingly adversarial relationship with
Washington, is rethinking its own limits. Officials are beginning to
contemplate new, more flexible terms of inclusion, and Canada, whose
prime minister has been urging Europe to create a space for a country
heavily reliant on the U.S., will be the prototype.
Amazon Boosts Minimum Pay for U.S. Full-Time Core Operations Staff to $20
/Hour
Amazon.com is raising the minimum starting wage for its U.S. full-time
core operations employees to $20 an hour, a move that comes ahead of its
major holiday hiring push.
The $1-per-hour increase applies to the e-commerce company's
front-line workers, who handle tasks like sorting, packing and
transporting orders. Amazon announced the move on Wednesday alongside new
benefits like discounts on groceries through its online platforms and
Whole Foods Market locations.
The pay increase and additional benefits come as Amazon is nearing the
peak holiday shopping season, when the company embarks on a hiring spree
to handle the surge in online orders that are about to pour through its
network. Last year, Amazon planned to hire 250,000 full-time, part-time
and seasonal workers in advance of the holidays.
Novo Nordisk Will Use Anthropic's Claude for Drug Research
Novo Nordisk, the Danish drugmaker behind blockbuster diabetes and
weight-loss drugs Ozempic and Wegovy, is partnering with Anthropic to use
artificial intelligence for drug research.
Novo said Wednesday it would use Anthropic's science-specific
platform, known as Claude Science, to help speed up the discovery and
development of new medicines and strengthen the pharmaceutical company's
software development.
The partnership is the latest by a slate of major drugmakers,
including Eli Lilly, Merck and Roche, that are placing big bets that AI
can help them discover and produce medicines more quickly.
Mucinex Maker Bets $400 Million More on U.S. Supply Chain
The maker of Mucinex and Lysol is doubling down on U.S. product
development and manufacturing to respond more quickly to shifts in
consumer demand.
Consumer-goods seller Reckitt Benckiser Group said Wednesday it plans
to invest about $400 million over the next four years in the U.S.,
building on a $200 million commitment made in 2024.
The additional investment is meant to speed up product innovation,
help bolster its supply chain against disruptions and speed up its
ability to meet spikes in consumer demand.
Mattel CEO Sees Growth Ahead as Shoppers Are Buying Toys Again
Renewed demand in the toy industry is expected to provide much-needed
growth for Mattel this year, according to CEO Ynon Kreiz.
Kreiz, who spoke Tuesday at the Goldman Sachs Consumer and Retail
Conference, said Mattel is "very confident about continued growth" and
the firm anticipates achieving its guidance. Last month, Mattel forecast
fiscal-year earnings in the range of $1.27 to $1.39 a share and between
3% and 6% revenue growth. Wall Street was expecting adjusted earnings of
$1.59 a share and $5.98 billion in revenue.
Mattel stock has dropped 33% this year following a disappointing 2025
holiday season, during which the toy company fell short of the strong
growth it had anticipated. Unexpectedly weak retail sales, rising
consumer debt, and delinquency rates at the time suggested a broader
pullback from lower-income households. Shares were down 0.7% Wednesday
morning.
TALKING POINT What Fed Rate Increase Means for Your Money
The Federal Reserve's move to raise short-term rates by a quarter percentage point Wednesday is poised to ripple through the banking system and debt markets. Credit card debt, home loans and savings accounts are all likely to react. Here's a breakdown of the impacts:
Credit-card borrowers will feel the increase quickly. A quarter-point hike would add about $1.38 a month in interest on the average $6,600 card balance, said Charlie Wise, head of global research at TransUnion. The increase is small on its own, but can add to the burden for borrowers carrying larger balances month to month.
Auto-loan rates, which tend to follow longer-term market rates, are unlikely to be significantly affected. Even if lenders pass along the full quarter-point increase, Cox Automotive estimates it would add about $6 a month to a new-car payment and $4 to a used-car payment. A series of increases would be more consequential, said Matt Schulz, chief consumer finance analyst at LendingTree.
Not directly. Mortgage rates are tied to the 10-year Treasury yield rather than the shorter-term federal funds rate set by the Fed. That is because most 30-year mortgages last around 10 years before being refinanced or exited through a sale.
Treasury yields didn't move decisively following the Fed's meeting largely because the bond market had already priced in expectations for a rate hike.
--Nicholas G. Miller and Dalvin Brown, The Wall Street Journal
Expected Major Events for Thursday 11:00/UK: UK interest rate decision
12:30/CAN: Jul International transactions in securities
12:30/US: Aug New Residential Construction - Housing Starts and Building Permits
12:30/US: Sep Philadelphia Fed Business Outlook Survey
12:30/CAN: Jul Employment Insurance
12:30/US: 09/12 Unemployment Insurance Weekly Claims Report - Initial Claims
12:30/US: U.S. Weekly Export Sales
12:30/CAN: Aug Industrial product and raw materials price indexes
12:30/CAN: Aug New Housing Price Index
13:00/RUS: Weekly International Reserves
14:00/US: Aug Pending Home Sales Index
14:30/US: 09/11 EIA Weekly Natural Gas Storage Report
20:30/US: Federal Discount Window Borrowings
20:30/US: Foreign Central Bank Holdings
23:30/JPN: Aug CPI (Nation), CPI ex-food (Nation)
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Expected Earnings for Thursday InnSuites Hospitality Trust (IHT) is expected to report for 2Q.
Reitmans (Canada) Ltd (RET.V,RTMNF) is expected to report for 2Q.
Trio-Tech International (TRT) is expected to report for 4Q.
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