09/17/25
Stocks were flat heading into today's interest rate decision from the Federal Reserve. They have been moving up relentlessly in anticipation of these cuts, and depending on how the Fed presents this new monetary policy statement, the stock market could be off to the races, or we could see a sell the news reaction. There is a lot for them to consider, and a lot is riding on today's events.
The end of speculation is drawing near as the Federal Reserve will give their decision on interest rates today, as well as their outlook for the economy and future cuts. It's big, and they have a tough job on their hands.
To me the question is, do we need an interest rate cut? I think there is a good argument for not getting one but clearly as investors we believe stocks will likely go up if we get one, that is unless there is a sell the news reaction since stocks have been going up leading into today's meeting.
The biggest case for a cut is the weakening employment data, and if that trend continues, and if that is a serious issue, than perhaps the Fed was actually too late to start cutting? Other than that, inflation is a little sticky on the upside, which could get worse if rates are cut, the stock market is sitting at the all-time highs and doesn't seem to need another catalyst, and the economy is acting very well. The retail sales data was very strong yesterday.
Retail Sales For: Aug
Actual: 0.6%
Briefing.com Forecast: 0.1%
Prior report revised to 0.6%
Revised From: 0.5%
I'm not smart enough to know what the right answer is, and I am not rooting for or against a cut. I do know if we do get a series of cuts, gold, crypto, stocks, etc., should all continue to do well, and that's a good thing for our investments. But will the consequences show up later? At this point it seems like a foregone conclusion that they will cut the Fed Funds Rate by 0.25% today, but if they give any hint that they won't keep going, the stock market could get fussy.
Right now I don't see the urgency and it will be nice to have interest rate cuts in the Fed's pocket for when the economy does eventually suffer. Maybe the economy would suffer if they don't cut based on the current situation in the labor market, but it's difficult to say.
But if they do cut, and they do remain dovish and and signal more cuts to come (there are 6 cuts getting priced in through next year) the stock market will likely take off even higher, and then we'll be watching those inflationary economic reports very closely in the coming months.
Lower rates and the weakening dollar, which broke down yesterday, are also fodder for inflation concerns as each increase buying power.
The S&P 500 / C-fund made another new all time high yesterday before it backed off, and you can see there is some resistance in the current area. Resistance can be predictive, or a self fulfilling prophesy as market technicians see it, and react to it, just as I might react to resistance. If it can get above that resistance, it could open the door to another wave higher. Or we can see resistance hold and the S&P move down to test the bottom of the channel again. There's too much unknown at this point to make a good decision, without a complete guess.
The market leading Dow Transportation Index continues to coil up for something as resistance holds and support comes up from below. Any trading below 15,400 would not be good, and a move above about 15,700 would be bullish, so this could set the tone for the pulse of the economy, and what investors believe is coming next.
Here's hoping you are on the right side of any big moves.
The DWCPF (S-fund) was down slightly yesterday but closed off the lows of the day so dip buyers were hanging around. This chart may be overdue for a test of those support lines below, but the market rarely gives us exactly what we expect.
ACWX (I-fund) made a new high yesterday, but it backed off before the close. I am a little surprised that this didn't do better considering the breakdown in the dollar yesterday. The loss yesterday filled in an open gap from July. It could hold there or obviously test the July lows.
BND (bonds / F-fund) continues to remain buoyant with yields staying pinned near their recent lows. If the Fed does cut rates, it doesn't necessarily mean yields will go down. It will all depend on the Fed's outlook.
Thanks so much for reading! We'll see you back tomorrow.
Tom Crowley
Read more in today's TSP Talk Plus Report. We post more charts, indicators and analysis, plus discuss the allocations of the TSP and ETF Systems. For more information on how to gain access and a list of the benefits of being a subscriber, please go to: www.tsptalk.com/plus.php
Questions, comments, or issues with today's commentary? We can discuss it in the Forum.
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Posted daily at www.tsptalk.com/comments.php
The legal stuff: This information is for educational purposes only! This is not advice or a recommendation. We do not give investment advice. Do not act on this data. Do not buy, sell or trade the funds mentioned herein based on this information. We may trade these funds differently than discussed above. We may use additional methods and strategies to determine fund positions.
Stocks were flat heading into today's interest rate decision from the Federal Reserve. They have been moving up relentlessly in anticipation of these cuts, and depending on how the Fed presents this new monetary policy statement, the stock market could be off to the races, or we could see a sell the news reaction. There is a lot for them to consider, and a lot is riding on today's events.
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The end of speculation is drawing near as the Federal Reserve will give their decision on interest rates today, as well as their outlook for the economy and future cuts. It's big, and they have a tough job on their hands.
To me the question is, do we need an interest rate cut? I think there is a good argument for not getting one but clearly as investors we believe stocks will likely go up if we get one, that is unless there is a sell the news reaction since stocks have been going up leading into today's meeting.
The biggest case for a cut is the weakening employment data, and if that trend continues, and if that is a serious issue, than perhaps the Fed was actually too late to start cutting? Other than that, inflation is a little sticky on the upside, which could get worse if rates are cut, the stock market is sitting at the all-time highs and doesn't seem to need another catalyst, and the economy is acting very well. The retail sales data was very strong yesterday.
Retail Sales For: Aug
Actual: 0.6%
Briefing.com Forecast: 0.1%
Prior report revised to 0.6%
Revised From: 0.5%
I'm not smart enough to know what the right answer is, and I am not rooting for or against a cut. I do know if we do get a series of cuts, gold, crypto, stocks, etc., should all continue to do well, and that's a good thing for our investments. But will the consequences show up later? At this point it seems like a foregone conclusion that they will cut the Fed Funds Rate by 0.25% today, but if they give any hint that they won't keep going, the stock market could get fussy.
Right now I don't see the urgency and it will be nice to have interest rate cuts in the Fed's pocket for when the economy does eventually suffer. Maybe the economy would suffer if they don't cut based on the current situation in the labor market, but it's difficult to say.
But if they do cut, and they do remain dovish and and signal more cuts to come (there are 6 cuts getting priced in through next year) the stock market will likely take off even higher, and then we'll be watching those inflationary economic reports very closely in the coming months.
Lower rates and the weakening dollar, which broke down yesterday, are also fodder for inflation concerns as each increase buying power.
The S&P 500 / C-fund made another new all time high yesterday before it backed off, and you can see there is some resistance in the current area. Resistance can be predictive, or a self fulfilling prophesy as market technicians see it, and react to it, just as I might react to resistance. If it can get above that resistance, it could open the door to another wave higher. Or we can see resistance hold and the S&P move down to test the bottom of the channel again. There's too much unknown at this point to make a good decision, without a complete guess.
The market leading Dow Transportation Index continues to coil up for something as resistance holds and support comes up from below. Any trading below 15,400 would not be good, and a move above about 15,700 would be bullish, so this could set the tone for the pulse of the economy, and what investors believe is coming next.
Here's hoping you are on the right side of any big moves.
The DWCPF (S-fund) was down slightly yesterday but closed off the lows of the day so dip buyers were hanging around. This chart may be overdue for a test of those support lines below, but the market rarely gives us exactly what we expect.
ACWX (I-fund) made a new high yesterday, but it backed off before the close. I am a little surprised that this didn't do better considering the breakdown in the dollar yesterday. The loss yesterday filled in an open gap from July. It could hold there or obviously test the July lows.
BND (bonds / F-fund) continues to remain buoyant with yields staying pinned near their recent lows. If the Fed does cut rates, it doesn't necessarily mean yields will go down. It will all depend on the Fed's outlook.
Thanks so much for reading! We'll see you back tomorrow.
Tom Crowley
Read more in today's TSP Talk Plus Report. We post more charts, indicators and analysis, plus discuss the allocations of the TSP and ETF Systems. For more information on how to gain access and a list of the benefits of being a subscriber, please go to: www.tsptalk.com/plus.php
Questions, comments, or issues with today's commentary? We can discuss it in the Forum.
Daily Market Commentary Archives
For more info our other premium services, please go here... www.tsptalk.com/premiums.php
To get weekly or daily notifications when we post new commentary, sign up HERE.
Posted daily at www.tsptalk.com/comments.php
The legal stuff: This information is for educational purposes only! This is not advice or a recommendation. We do not give investment advice. Do not act on this data. Do not buy, sell or trade the funds mentioned herein based on this information. We may trade these funds differently than discussed above. We may use additional methods and strategies to determine fund positions.
