Cooler Crude, Yields Boost Stocks After Fed Hike
Published as of: September 17, 2026, 9:14 a.m. ET
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| The markets | Last price | Change | % change |
|---|---|---|---|
| S&P 500® Index | 7,551.81 | -33.92 | -0.45% |
| Dow Jones Industrial Average® | 51,461.90 | -631.21 | -1.21% |
| Nasdaq Composite® | 25,978.42 | -3.15 | -0.01% |
| 10-year Treasury yield | 4.98% | -0.02 | -- |
| U.S. Dollar Index | 100.07 | -0.17 | -0.17% |
| Cboe Volatility Index® | 15.45 | -2.26 | -12.76% |
| WTI Crude Oil | $99.92 | -$2.51 | -2.45% |
| Bitcoin | $76,775 | +$690 | +0.91 |
(Thursday market open) Following the first Federal Reserve rate hike in more than three years, stocks jumped across the board early thanks to declining yields and oil and perhaps some relief that the Fed backed recent hawkish words with action. The decision by Chairman Kevin Warsh and the other voting members was unanimous and the Fed telegraphed another hike before year-end.
"Warsh laid out a relatively hawkish path forward," said Collin Martin, head of fixed income research and strategy at the Schwab Center for Financial Research (SCFR). "He made it clear that the underlying inflation trends have not meaningfully improved, and by stating that the rate hike 'removed a dose of accommodation' suggests that he does not see policy as particularly restrictive."
Major indexes initially plunged Wednesday on the hike, but the S&P 500 Index clawed back about half its steepest losses by the close. It still fell for the seventh session in eight to six-week lows. U.S. crude dropped below $100 per barrel today when Saudi Arabia said it could restore about half the flow of its war-damaged pipeline within days and announced more efforts to keep oil flowing.
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Three things to watch
- Fed deeper dive: Economic resilience helped convince the Fed that the economy could grow with less help from central bank policy, Warsh said during his Wednesday press conference. The Fed is focused on the stable prices side of its dual mandate, he added. Inflation hasn't been at the Fed's 2% annual target for "too long," Warsh noted, and he hadn't seen improvement since his August speech in Jackson Hole. For context, the Fed hasn't raised rates just once since March 1997. "It seems very likely the Fed will hike again," Martin said. "From an economic perspective, 25 basis points isn't going to do too much, but it sends a message." Next week is packed with Fed speakers, and while 2027 remains cloudy, some used the Fed's "dot plot" to pencil in another hike next year. Whether that happens depends on the pace and outlook of inflation moving back toward 2%. This morning, odds of a hike next month were 55%, according to the CME FedWatch Tool. Odds of at least one rate increase by year-end were 90%.
- Rate hikes and the market: Though major indexes slid into Wednesday's rate decision and lost more ground afterward, the S&P 500 Index is down just 2.5% from all-time highs. The index has basically treaded water since June, hurt by rising yields and oil but staying afloat thanks to exuberant earnings not just from tech but across Wall Street. To some extent, major indexes reflect hopes that earnings will keep climbing even with tougher comparisons ahead. The wild card is the Fed. If rates climb as high as CME futures trading suggests by mid-2027—to well above 4%—earnings estimates could fall as borrowing costs rise. The market's path also depends on the pace of hikes. "If we see the Fed adopt an escalator response—hiking rates in small increments, perhaps at every other meeting—stocks should be able to digest the relatively slow tightening process," said Kevin Gordon, head of macro research and strategy at SCFR. "This is consistent with history, as the S&P 500 has, on average, moved up by 10.5% in the year after the start of a slow tightening cycle."
- Housing in focus: The Fed's hike yesterday came at an auspicious time for the battered housing market. Housing returned to focus after the Fed meeting as home builder Lennar (LEN) reported late yesterday and August housing starts and building permits bowed this morning. Housing is in a long slump as mortgage rates recently hit two-year highs above 7% and new home sales sagged. The MBA Mortgage Applications Index fell six of the last eight weeks. New home sales slid more than 10% month over month in July even as the average price of a new home rose 5.4% annually. Home builders face a conundrum: It costs more to build due to rising commodity prices and a lower labor supply amid immigration crackdowns. This forces them to raise home prices even as buying interest retreats due to high mortgages. Home builders often responded by building less, which tightens supply and keeps prices high. Lennar's earnings yesterday missed estimates and the company cut guidance. Housing is a major economic driver and might partly explain why GDP growth has disappointed so far this year.
Crypto currents
Stalling of Clarity Act just a speed bump for crypto: All things considered, crypto is holding up well. Bitcoin fell only 3.3% on Tuesday, after the U.S. Senate blocked advancement of the Clarity Act, a market-structure bill that many investors had hoped would trigger a crypto rally upon passage. Though failure to advance the act does remove a potential catalyst—at least for now, it could pass later—passage has never been priced into the market, which explains the relatively muted response, said Jim Ferraioli, director of digital currencies research and strategy at SCFR. Still, coins on other blockchains that are being used to innovate within the traditional financial system, such as through asset tokenization, may feel a bit of a drag over time due to a lack of improved regulatory clarity, Ferraioli said. "The genie is out of the bottle—crypto isn't going away—but further delays on crypto regulation could impact multi-year crypto roadmaps," he said.
" id="body_disclosure--media_disclosure--290071" >Stalling of Clarity Act just a speed bump for crypto: All things considered, crypto is holding up well. Bitcoin fell only 3.3% on Tuesday, after the U.S. Senate blocked advancement of the Clarity Act, a market-structure bill that many investors had hoped would trigger a crypto rally upon passage. Though failure to advance the act does remove a potential catalyst—at least for now, it could pass later—passage has never been priced into the market, which explains the relatively muted response, said Jim Ferraioli, director of digital currencies research and strategy at SCFR. Still, coins on other blockchains that are being used to innovate within the traditional financial system, such as through asset tokenization, may feel a bit of a drag over time due to a lack of improved regulatory clarity, Ferraioli said. "The genie is out of the bottle—crypto isn't going away—but further delays on crypto regulation could impact multi-year crypto roadmaps," he said.
On the move
- Lennar fell 1.6% early after missing consensus for both revenue and earnings per share. Deliveries of new homes fell 3%, and it lowered fiscal 2026 home delivery guidance, citing "deterioration" in market conditions.
- Chip and AI infrastructure stocks led this morning's upward move, helped by strength in shares of Arm Holdings (ARM), Intel (INTC), Marvell Technology (MRVL), and Corning (GLW). Shares of companies more peripherally involved in the AI buildout like GE Vernova (GEV) and Caterpillar (CAT) also rose moderately.
- Applied Digital (APLD) rose 5.6% early after Wells Fargo initiated coverage with an overweight rating.
- Nike (NKE) climbed 2.4% after news reports said the company appointed Alexandre Arnault to Nike's board of directors. Arnault is deputy CEO of the wine and spirits division of LVMH.
- Generac (GNRC) surged 29% early after CNBC reported that Amazon (AMZN) was granted warrants to buy up to $340 million in shares of Generac. This was part of a deal to supply backup power for Amazon's data centers.
- The U.S. Dollar Index climbed 0.7% yesterday—a large move for the currency—to above 100 for the first time since late July. Tighter Fed policy supports the currency, while a stronger dollar can hurt earnings from U.S. firms with large overseas businesses.
- Crude's early decline also reflected a report by Axios that President Trump plans to meet next week with leaders of Gulf states at the United Nations General Assembly to discuss postwar strategy.
- Weekly initial jobless claims fell by 10,000 to 196,000 last week, the government said today, near the low end of the recent range and very low historically.
- August housing starts and building permits totaled 1.275 million and 1.325 million on a seasonally adjusted annual basis. Both missed Briefing.com consensus and fell from July.
- Nine of 11 S&P 500 sectors ended Wednesday in the red. Risk-off sectors—including utilities and health care—led the pack. Energy and financials plunged as oil prices took a break from their recent surge and the Fed raised rates.
- SpaceX (SPCX) climbed 5% Wednesday after the company announced its next Starship test launch would occur September 22, CNBC reported.
- Dow (DOW) rose Wednesday despite saying it now sees third-quarter earnings slightly lower than prior expectations. This follows disappointing forecasts from J.B. Hunt Transport Services (JBHT) and Bank of America (BAC) this week. However, Honeywell (HON) jumped yesterday on an enthusiastic forecast.
More insights from Schwab
Schwab's take on Fed hike: The Fed's rate hike yesterday may not have been enough on its own to address stubborn inflation, but it's a start, my colleague Martin wrote in his analysis. As the dot plot suggests, there’s likely more work to be done to get inflation down in a timely manner.
Higher yields and munis: Municipal bonds have stumbled recently as Treasury yields have moved higher, but we still believe they can play an important role for investors seeking relatively conservative, tax-advantaged income.
Stocks with elevated and rising short interest: The latest edition of the Short Interest Monitor is dominated by tech firms and emerging aerospace and aviation companies.
Chart of the day
Data source: CME Group. Chart source: thinkorswim® platform.
Past performance is no guarantee of future results.
For illustrative purposes only.
Gold futures (/GC—candlesticks) reversed course and moved lower after the Fed's rate decision Wednesday, testing support at a modestly rising 50-day moving average (red line). Gold had broken above a long-term trendline (white line) and its 200-day moving average (green line) in August, but the breakout failed.
The week ahead
Check out the investors' calendar for a summary of the top economic events and earnings reports on tap this week.
September 18: Bank of Japan rate decision, August industrial production, and Conference Board August leading indicators.
September 21: No major earnings or data expected.
September 22: Earnings expected from AutoZone (AZO) and KB Home (KBH).
September 23: Expected earnings from Cintas (CTAS), Paychex (PAYX), and General Mills (GIS).
September 24: August new home sales and expected earnings from Darden Restaurants (DRI) and Costco (COST).