The Week Ahead: Markets Brace for Fed Policy Shift and Updated Rate Projections

Market Overview

U.S. equities extended gains last week as softer labor data and mixed inflation readings strengthened expectations for Fed easing. The S&P 500 rose 1.6% to 6,584.3 (+13.0% YTD), the Nasdaq gained 2.0% to 22,141.1 (+15.2% YTD), and the Dow added 1.0% to 45,834.2 (+9.1% YTD). The VIX fell to 14.8, near its lowest level of the year.

The Fed’s September 17 policy meeting is this week’s central focus. Markets are fully pricing in a 25 bp cut, supported by weaker jobs data and PPI coming in below expectations. CPI held steady at 2.9% annualized, while Core CPI remained at 3.1%. Energy contributed to the headline rise, with gasoline prices up 1.9% month-over-month.

Labor data confirmed a cooling trend. Initial jobless claims rose to 263,000, the highest since 2021. QCEW revisions showed 911,000 fewer jobs than previously reported. The unemployment rate climbed to 4.3%, while labor force participation edged down to 62.3%, adding pressure on the Fed to act.

Bond yields moved lower on Fed expectations, with the 10-year Treasury briefly touching 4.0%. Lower yields are helping support equity valuations and credit-sensitive sectors, even as markets brace for updated Fed projections and a new dot plot this Wednesday.

Key Economic Releases & Notable Earnings

Monday, Sep 15
Before the Open:
• Hain Celestial (HAIN), est. $0.03

Economic Releases:
• 12:30 GMT – Empire State Manufacturing Index, forecast 4.3 (prior 11.9)

After the Close:
• Dave & Buster’s (PLAY), est. $0.91

Tuesday, Sep 16
Before the Open:
• Ferguson (FERG), est. $3.02

Economic Releases:
• 12:30 GMT – Core Retail Sales m/m, forecast 0.4% (prior 0.3%)
• 12:30 GMT – Retail Sales m/m, forecast 0.2% (prior 0.5%)
• 12:30 GMT – Import Prices m/m, forecast -0.2% (prior 0.4%)
• 13:15 GMT – Capacity Utilization Rate, forecast 77.4% (prior 77.5%)
• 13:15 GMT – Industrial Production m/m, forecast -0.1% (prior -0.1%)
• 14:00 GMT – Business Inventories m/m, forecast 0.2% (prior 0.2%)
• 14:00 GMT – NAHB Housing Market Index, forecast 33 (prior 32)

After the Close:
• No reports scheduled

Wednesday, Sep 17
Before the Open:
• Cracker Barrel (CBRL), est. $0.67
• General Mills (GIS), est. $0.81

Economic Releases:
• 12:30 GMT – Building Permits, forecast 1.37M (prior 1.35M)
• 12:30 GMT – Housing Starts, forecast 1.36M (prior 1.43M)
• 14:30 GMT – Crude Oil Inventories, prior +3.9M
• 18:00 GMT – Fed Funds Rate Decision, forecast 4.25% (prior 4.50%)
• 18:00 GMT – FOMC Economic Projections
• 18:00 GMT – FOMC Statement
• 18:30 GMT – Powell Press Conference

After the Close:
• Bullish (BLSH), est. -$0.05

Thursday, Sep 18
Before the Open:
• Darden Restaurants (DRI), est. $1.99
• FactSet (FDS), est. $4.13

Economic Releases:
• 12:30 GMT – Unemployment Claims, forecast 245K (prior 263K)
• 12:30 GMT – Philly Fed Manufacturing Index, forecast 1.4 (prior -0.3)
• 14:00 GMT – CB Leading Index m/m, forecast -0.1% (prior -0.1%)
• 14:30 GMT – Natural Gas Storage, prior +71B
• 20:00 GMT – TIC Long-Term Purchases, prior +150.8B

After the Close:
• FedEx (FDX), est. $3.64
• Lennar (LEN), est. $2.10

Friday, Sep 19
Before the Open:
• No reports scheduled

Economic Releases:
• No releases scheduled

After the Close:
• No reports scheduled

Central Bank Activity

The Fed is expected to cut rates by 25 bps at Wednesday’s FOMC meeting (18:00 GMT), with Powell speaking at 18:30 GMT. Markets will focus on updated dot plots and projections for inflation, unemployment, and growth. The shift in tone toward labor market weakness may open the door to additional easing later this year.

Technical Outlook

S&P 500: 6,584.29 (+1.6%), support at 6,343.86, resistance at 6,680. 52-week SMA at 5,955.21

Nasdaq: 22,141.10 (+2.0%), support at 21,033.05, resistance at 22,182.34. 52-week SMA at 19,256.85.

Dow Jones: 45,834.23 (+1.0%), support at 43,340.68, resistance at 46,137.20. 52-week SMA at 43,086.85.

All major indices remain above key moving averages and in bullish weekly structures. Momentum is supported by easing bond yields and Fed cut expectations.

Outlook

This week’s FOMC decision is the key catalyst. Markets are pricing in a 25 bp cut, but attention will be on the updated dot plot and Powell’s tone. The labor market is showing broad signs of softening, giving the Fed cover to ease despite core inflation holding above target.

Retail sales, housing data, and earnings from FedEx will also help shape growth expectations. If inflation appears contained and Powell confirms a dovish tilt, bulls may get further support into Q4.

More Information in our Economic Calendar.