Dow Jones & Nasdaq 100 Rise as Fed Rate Cut Bets Counter China Data and Trade Tensions

US-China Trade Talks, Chinese Data, and Fed Rate Cut Bets

Will the Fed’s cut be enough to offset China’s slowdown? US stock futures edged higher on Monday, September 15, as the Fed’s interest rate decision loomed.

Chinese economic data signaled a further loss of momentum in August as US-China trade talks resumed in Madrid.

China Data Flashes Red

Retail sales growth slowed from 3.7% year-on-year (YoY) in July to 3.4% in August, while unemployment rose to 5.3% (July: 5.2%). A weakening labor market and further declines in house prices weighed on private consumption. Furthermore, industrial production rose 5.2% YoY, down from 5.3% in July.

August’s data reflected ongoing effects of US tariffs targeting both direct imports and transshipments, challenging Beijing’s 5% GDP growth target for 2025.

Weakening external demand and the effects of tariffs on margins and the labor market underscored the need for a US trade deal.

The weaker-than-expected data capped gains across the US stock futures, overshadowing expectations of aggressive Fed rate cuts.

Markets React: Futures Advance on Fed Policy Bets

US stock futures trended higher in morning trading on Monday, after the main indexes’ mixed Friday session. The Nasdaq 100 E-mini rose 4 points, the S&P 500 E-mini gained 4 points, while the Dow Jones E-mini advanced 33 points.

Fed rate cut bets limited the impact of weak data from China on US stock futures as focus shifts to trade talks and the upcoming Fed interest rate decision. A rapidly cooling US labor market has cemented bets on a rate cut this Wednesday, with economists expecting further easing in the fourth quarter.

Notably, a more dovish Fed rate path may enable Beijing to deliver more robust policy support to bolster the economy. However, US-China trade talks could be crucial for risk sentiment.

US-China Trade Talks Underway: Is a Deal in Sight?

US-China trade tensions escalated as trade talks got underway on Sunday, September 14. The US reportedly added more than 20 Chinese counterparties to its export control list, targeting transshipments of controlled items. Meanwhile, Beijing started investigations into anti-dumping, targeting the US semiconductor sector.

According to CN Wire,

“The Ministry of Commerce of China has initiated an anti-discrimination case investigation regarding relevant measures taken by the United States against China in the integrated circuit field. The Ministry of Commerce of China has also initiated an anti-dumping case investigation regarding relevant imported analog chips originally from the United States.”

A breakdown in trade talks could derail September’s rally, while progress could extend it.

US Manufacturing and the Fed Rate Path

The NY Empire State Manufacturing Index release could sway risk appetite. Economists expect the Index to fall from 11.9 in August to 3 in September. A sharper drop into negative territory could fuel recession fears, while upbeat data may bolster demand for US stock futures.

Because the Fed remains focused on the labor market, manufacturing data is unlikely to shift policy unless significantly weaker than expected.

Aggressive easing would lower borrowing costs, boosting earnings and share prices. Rate-sensitive sectors such as tech will be most sensitive to a shifting Fed policy stance.

Key Technical Levels for Dow Jones, Nasdaq 100, and S&P 500

The morning gains affirmed the short-term bullish bias. However, momentum depends on the FOMC’s decision, projections, and press conference. Trade developments will also influence market trends. For traders, here are the key levels that could determine market direction in the coming sessions.

Dow Jones

• Resistance: 46,000, September 11 record high of 46,176, and then 46,500.
• Support: 45,500 and then the 50-day EMA (44,867).

Nasdaq 100

• Resistance: September 12 record high of 24,159 and 24,500.
• Support: 24,000, 23,500, and the 50-day EMA (23,322).

S&P 500

• Resistance: September 12 record high of 6,606 and 6,750.
• Support: 6,500 and the 50-day EMA (6,392).

September Outlook: Trade and Fed in Focus

With the Fed interest rate decision and projections, and US-China trade talks in focus, traders should closely track key events that could extend or unravel the September rally. Follow our live coverage and consult our economic calendar.