US Stock Market Preview | All Three Major Index Futures Rise, Oil Prices Fall, Federal Reserve Rate Decision Coming Tonight

Pre-market Market Trends

1. On Wednesday, September 16th, before the U.S. market opens, futures of the three major U.S. stock indexes all rose. As of press time, Dow Jones futures were up 0.26%, S&P 500 futures up 0.25%, and Nasdaq futures up 0.51%.

2. As of press time, Germany’s DAX was up 0.24%, the UK’s FTSE 100 up 0.60%, France’s CAC40 up 0.53%, and the Euro Stoxx 50 up 0.55%.

3. As of press time, WTI crude oil fell 2.38%, quoted at $103.31 per barrel. Brent crude oil fell 1.49%, quoted at $107.13 per barrel.

Market News

Major Fed Rate Decision Incoming! At 2:00 AM Beijing time on Thursday, the Federal Reserve will announce its interest rate decision and latest economic outlook. Half an hour later, Fed Chair Walsh will hold a press conference. A month ago, the market saw only a 33.1% probability of a rate hike, but currently this probability has risen close to 95%, with the market largely pricing in a hike. If the Fed does raise rates as expected, this would mark its first hike in over three years. However, what the market is really waiting for is not just this 25 basis points increase, but more importantly, three key signals. How does the Federal Reserve interpret the oil price shock—an isolated short-term disturbance, or something that will spread to wages, service prices, and long-term inflation expectations? Is this just an adjustment, or the beginning of a new rate-hiking cycle? How much economic and market pressure is Walsh willing to bear to tame inflation?

White House pressure can’t prevent the hawkish turn! Fed rate hikes seem imminent, testing Walsh’s ties with Trump. The market expects the Fed to raise rates on Wednesday—the first time since 2023—as policymakers are losing confidence that “inflation can be cooled without at least a nudge from the central bank.” This is likely to strain the relationship between Chair Walsh and President Trump. The rate hike may draw new criticism from the White House. Just last Sunday, Trump repeated his argument that the U.S. should have the lowest borrowing costs globally. Since Trump appointed Walsh in place of Powell, the president has largely toned down his attacks on the Fed. He has even suggested Walsh is facing pressure from other Fed officials to raise rates, accusing these officials of being “very political.” However, in a speech at the end of August, Walsh made it clear that underlying price pressures had shown no real improvement, and if the Fed doesn’t receive new assurances confirming inflation is steadily heading towards the 2% target, the Fed “still has work to do.”

Dovish camp changes course! Nomura: Two main reasons why the Fed may hike twice this year. Nomura, long considered one of the more dovish voices on Wall Street, has recently overturned its previous wait-and-see stance and fully shifted to a hawkish outlook. The firm’s latest analysis suggests the Fed is expected to raise rates by 25 basis points each in September and December, possibly extending this tightening cycle even further. Nomura’s shift is not without foundation, driven by two key factors: first, signs of repeated setbacks in the U.S. inflation fight, and second, a more pronounced tightening bias in the Fed’s core communication style. In Nomura’s view, the stagnation in falling inflation is fundamentally forcing the Fed to restart the tightening process. Moreover, the tough attitude projected by Walsh sharply contrasts with the market’s broad previous expectation of a lengthy rate-hike pause, directly upsetting the policy status quo.

Don’t fight the earnings cycle! S&P 500 to break 8,000 points this year? Jefferies predicts that, driven by the AI investment frenzy and better-than-expected corporate earnings growth, the S&P 500 could soar to 8,000 points by the end of this year and even reach 9,000 by 2027. The report notes that despite macro headwinds such as higher 10-year U.S. Treasury yields, stubborn inflation, and midterm elections, corporate fundamentals will remain the core driver of returns. Jefferies’ logic is clear and compelling: in a cycle where earnings growth is more than twice the historical average, fighting against the earnings trend is dangerous. Additionally, Jefferies points out that AI-driven earnings expansion is spreading from the “Magnificent Seven” to the broader market, providing a firmer foundation for equities. Investors should focus on overweighting sectors such as technology, financials, healthcare, and materials, which have strong earnings revisions and macro support, seizing this rare super earnings cycle despite valuation contraction concerns. However, Jefferies also highlights two key risks: first, if real earnings growth among AI-related companies slows substantially, the very premise of the bull market is threatened; second, continued rises in the 10-year U.S. Treasury yield could create systemic pressure on equities via valuation compression.

“AI Slowdown Theory” meets the 5% “global asset pricing anchor”—tech risks jump! Wells Fargo redraws U.S. equity investment map, lowers S&P 500 target. Wells Fargo’s Chief Equity Strategist Ohsung Kwon reduced the year-end target for the S&P 500 from 7,950 to 7,700 and lowered his rating on the technology sector from “overweight” to “equal-weight,” citing the mounting risks from the upcoming midterm elections, especially as opposition to data center development intensifies. The strategist is increasingly concerned that years of earnings expansion have pushed market expectations near historic highs, while AI capital expenditure, state-level restrictions on data center construction, and uncertainty in fiscal and monetary policies are recently being amplified. Notably, the strategist does not express major concern for 2027 earnings, but warns that a slowdown in AI data center spending could hit profits in 2028. Thus, this adjustment amounts to a reassessment of the long-term outlook and valuation for the U.S. equities market.

Stock News

U.S. optical communication stocks broadly rise in pre-market trading. As of press time on Wednesday’s pre-market, Nokia (NOK.US) is up over 6%, Coherent (COHR.US) and Lumentum (LITE.US) are both up over 3%, while Corning (GLW.US), Marvell Technology (MRVL.US), Credo Technology (CRDO.US), and Astera Labs (ALAB.US) are all up nearly 2%.

Rumor: SK Hynix (SKHY.US) plans first U.S. memory chip manufacturing, may rent Intel (INTC.US) Ohio plant or form joint venture. Korean company SK Hynix is reportedly in talks with Intel for a deal that would see its memory chips produced in the U.S. for the first time. One possible option is for SK Hynix to lease part of Intel’s planned wafer facility in Ohio; another is to form a joint venture with Intel and major cloud companies eager to secure memory chip supply. However, potential opposition from Korea could become a major hurdle. One source noted the partnership is still in the exploratory stage and emphasized that nothing has been finalized; SK Hynix may also consider other transaction structures. In a statement, SK Hynix said it is “evaluating various measures, including establishing more production bases, to enhance memory business competitiveness,” but “nothing has been decided yet.”

Meta (META.US) doubles down on in-house AI chips! To deploy in data centers in first half of next year, aiming to reduce inference costs and power consumption. Meta plans to deploy the new generation of its homemade artificial intelligence chips in data centers in the first half of 2027, hoping that custom chips will reduce the energy consumption and costs associated with operating AI models. Meanwhile, the company has committed to deploy more than 1 GW for the relevant chips, and stated that if AI demand remains strong, deployment speed could increase further. Meta’s VP of Engineering, Yee Jiun Song, said the third-gen in-house AI processor, MTIA 450 (codenamed “Arke”), is currently in the testing phase. The first batch of 12 Arke chips was delivered to Meta by TSMC on September 1st, and their real-world performance differs from previous simulated results by only 2%–3%.

Rumor: Starbucks (SBUX.US) considering sale of majority stake in Japan business, valuation could reach $3 billion. According to two insiders, Starbucks is considering selling the majority stake in its Japan operations. This potential deal could value the coffee chain’s largest overseas directly-operated market at around $3 billion. Sources said Starbucks has consulted multiple financial advisors about possible options and is open to selling the majority stake. One source noted the exact stake size is yet to be determined, and the final valuation will depend on negotiation. The potential sale comes as Starbucks, under Nicolle’s leadership, is restructuring its global business portfolio, closing stores and cutting corporate roles in North America to restore profitability. Sources expect the divestment process to attract both global and local private equity firms, and a formal sale process could launch as early as Q4.

Wall Street giants experience a tale of two trading businesses: JPMorgan (JPM.US) expects Q3 performance to surge, Bank of America (BAC.US) cautions on slowdown. JPMorgan Co-President Doug Petno said on Tuesday that trading revenue for the quarter ending September 30 is expected to increase in the mid-to-high teens percentage range. He also noted that the firm’s investment banking fee income could rise by a similar range. Meanwhile, at the same event a day earlier, Bank of America CEO Brian Moynihan said Q3 revenue will be “essentially flat” compared to the same period in 2025. Moynihan attributed the slowdown in financing activity partly to the reduced balances of Asian prime brokerage clients.

Key Economic Data & Events to Watch

20:30 Beijing Time: U.S. August retail sales (MoM)

02:00 (next day) Beijing Time: Federal Reserve interest rate decision

02:30 (next day) Beijing Time: Federal Reserve Chair’s press conference on monetary policy