Market Wrap
Published
The S&P 500 closed down 0.5%, with the Federal Reserve's 25 basis point rate hike to a 3.75%-4% target range reshaping the session's second half even as energy sector weakness had already been dragging on the index for most of the day.
The Fed moved unanimously, with the median projection showing rates at 4.1% by year-end, implying one additional hike in 2026. Governor Warsh said financial conditions are not clearly restrictive, that inflation has failed to pass the Fed's test, and that the FOMC's predominant focus remains price stability. Traders responded by adding to bets on two more hikes by year-end, pricing roughly a 50% chance of a move as soon as October. The 2-year Treasury yield surged to 4.73%, its highest level of the year, and the dollar index rose to 100.19, its strongest reading since July 31. The White House called the hike "rather unfortunate," while Council of Economic Advisers Chairman Phelan had earlier said hiking would be a mistake. DoubleLine CEO Gundlach said he sees virtually no chance the current level is the cycle peak.
Energy was the session's dominant pressure point before the Fed even acted. Crude settled down 3.2% at $102.43 a barrel after the API reported a 7.1 million barrel inventory build against a 1.8 million barrel draw expected, and Saudi Arabia said it expects to restore roughly half of the East-West Pipeline's capacity within days, with full recovery in about six weeks. Energy Secretary Wright confirmed 18 million barrels flowed out of the Persian Gulf on Monday, with the Hormuz seven-day average running at 11 million barrels per day. Exploration and production stocks bore the brunt: Matador Resources fell 8.5%, Magnolia Oil and Gas dropped 8.6%, Occidental Petroleum lost 6.5%, and Chord Energy fell 6.6%, leaving the Energy sector down 2.9% on the day. Wright flagged the Defense Production Act as a potential tool to expand refining capacity and said a US oil company would discuss Venezuela investment, with Continental separately expected to reveal deal details there following amended Treasury sanctions through OFAC.
The geopolitical backdrop remained active. Explosions were reported on Iran's Qeshm Island. A US-contracted vessel was struck in an Iranian attack earlier in the week. Houthis claimed targeting an Aramco site in Yanbu and attempted to fly a drone into Mecca airspace, which the Saudi-led coalition intercepted. US diplomats held talks with Houthi representatives in Oman, with the Houthis signaling they will avoid attacking Israeli vessels. The US Strategic Petroleum Reserve fell to its lowest level since 1982.
Financials fell 1.9%, led by regional banks. Citizens Financial dropped 4.8%, Huntington Bancshares and Robinhood each fell 5.5%, KeyCorp declined 4.5%, and Coinbase lost 4.5%. The Senate's earlier failure to advance the Clarity Act crypto regulatory bill weighed on crypto-adjacent names. Huntington separately raised its 2026 fee income growth outlook to about 32% year over year at a Barclays conference while adopting a more conservative 2027 EPS outlook.
Company News
- J.B. Hunt was the session's most dramatic single-stock story in the industrial space, with the stock closing down 3.9% in the final tape, extending a sharp move that began in after-hours trading the prior evening and reached as low as -12.9% intraday amid the broader freight complex selloff that also pulled Knight-Swift down 3.9% and Saia down 1.2%.
- nVent Electric agreed to acquire Maverick Power, a data center power distribution manufacturer based in McKinney, Texas with roughly $527 million in trailing revenue, for $1.75 billion with up to $550 million in additional performance-based consideration tied to 2027 and 2028 results. The deal is expected to close in the fourth quarter of 2026.
- D.R. Horton authorized a new $5 billion share repurchase program with no expiration date, and now expects total fiscal 2026 buybacks of at least $3.25 billion.
- Brookfield agreed to acquire Reliance Worldwide Corporation in an all-cash deal at US$3.38 per share, valuing the plumbing and heating solutions manufacturer at an enterprise value of approximately US$2.8 billion. The deal is expected to close in Q1 2027.
- Oscar Health raised its full-year 2026 Earnings from Operations guidance to a range of $600 million to $800 million, up $100 million from the prior range, and improved its Medical Loss Ratio outlook by 50 basis points while reaffirming revenue guidance of $18.7 billion to $19.0 billion.
- OpenAI is weighing a funding round at a $1.2 trillion valuation ahead of an IPO, according to the Financial Times.
- CoreWeave rose 3.0% after launching a multi-rack Nvidia Vera Rubin NVL72 cluster.
- Boeing's CEO said 737 Max 10 certification is coming very shortly, but warned that a Speea strike would shut down the 777X certification program and that 777X engine delays could push some testing into 2027. Wing production remains the key supply-chain constraint limiting the ramp to 47 jets per month, reducing the likelihood of reaching the upper end of the company's 2026 free-cash-flow forecast.
- American Airlines said high fuel prices will require capacity adjustments, even as its CEO expressed confidence in guidance.
- Google and DeepMind launched an institute to explore artificial general intelligence. Salesforce plans to bring OpenAI models into government environments. Apple is developing an enterprise server using its own chips and held talks with Nvidia on network technology.
- Coinbase is pursuing a fully backed tokenized equities push targeting the $70 trillion US stock market.
- Dell Technologies completed a $5 billion senior notes offering across four tranches. Uber Technologies closed a euro-denominated offering of roughly $4.5 billion equivalent across five tranches. nVent Electric separately entered into an underwriting agreement for $800 million of 6.150% senior notes due 2036, expected to close September 29.
- First Solar fell 5.8% and EPAM Systems dropped 5.1% in technology, while Raymond James Financial gained 4.6% and Live Nation Entertainment rose 4.3% among the session's broader movers.