Fed Unpauses Rate Cut Pause

CLOSING BELL

Fed Unpauses Rate Cut Pause

The market climbed Wednesday right after the FOMC cut interest rates 25 basis points, but ten minutes later, prices fell. Financial stocks were happy, leading sectors on the S&P 500 higher, as the promise of lower mortgage rates sent refinancing applications up 60% in the past week. 

As tech fell, smaller companies led the Russell 2000 higher, and the Dow climbed on financials and staples. 

Today’s Rip: FOMC cut like everyone though they would, StubHub falls after NYSE IPO, and more. 

7 of 11 sectors closed green, with financials $XLF ( ▲ 0.97% ) leading and industrials $XLI ( ▼ 0.45% ) lagging.

 $SPY ( ▼ 0.12% )  $QQQ ( ▼ 0.2% )  $IWM ( ▲ 0.26% )  $DIA ( ▲ 0.54% ) 

MACRO

FOMC Cut Rates Like Everyone Thought They Would 

The FOMC cut rates by an expected 25 bps on Wednesday, in an 11-1 vote. Newly appointed Trump ally Stephen Miran wanted a 50 bps cut, and is likely the sole decenter in the forward-looking dot plot that called for a target rate below 3% by the end of the year. 

A cut together version of the Fed Dot Plot shows one member stood out with an outsized attitude to cut 

Fed Chair Jerome Powell, speaking at 2:30pm ET, said it was a risk management cut. He was asked, in layman’s terms, if prices are rising, and the Fed expects them to keep rising, why are they cutting rates? 

The Fed unanimously cut because the labor market has deteriorated, he said, and it’s the greater of two evils to focus on. Compared to June, when seven voting members saw no rate cuts for the rest of the year, opinions on the path forward have changed drastically. 

The projection now sees a majority of members see two more rate cuts this year, or 50 bps, with two meetings to go in October and December. That’s a new average target of 3.50-3.75%. Compared to June, September's median estimates from voting members on where GDP, inflation, and target rates will be in Jan ‘25, ‘26, and ‘27 had not changed much. 

Forward estimates have not changed much, though the FOMC sees higher growth and higher prices next year. 

The USD index hit its lowest since 2022, when rate hikes began. That’s the Trump Admin plan: make dollars cheaper so financing houses, factories, and trade is way easier. The problem is it might be short cited. The majority of fund managers surveyed by Bank of America expect inflation to climb big time, and nearly none expect the Fed to do anything about it. 

Still, bets on Polymarket shifted toward a three-cut outcome after the first cut all year on Wednesday. 

IPO NEWS

StubHub Punches Ticket to Ride Public Markets, Falls After Debut 

StubHub climbed upwards of 12% after its noon launch onto the New York Stock Exchange, but fell to end the day in the red $STUB ( ▼ 6.38% ). 

The online ticket seller priced at $23/share, raising $800M in its first day of trade, which the company said would go toward long-term debt. After 25 years in business, you better believe StubHub has some debt to pay off: Most recently, the firm took on debt when it was rebought from eBay by co-founder Eric Baker in 2020 for $4B.

Initially, the goal was to hit markets back in April before Trump’s liberation tariff day sent markets into a tailspin, but since then, the IPO market has exploded. 

In an age where Taylor Swift’s live shows can sway the GDP of an entire nation, selling tickets online has brought in the profit. StubHub filed a Q1 revenue growth of 10% from last year to $397.6M. Unfortunately, the company operates at a loss, and with rising revenue, its losses climbed this year to $35.9M. 

POPS & DROPS

Top Stocks News Stories 

1. Roivant jumps 7.8% as drug hits trial goals.
2. Apple edges up 0.4% on iPhone 17 demand.
3. General Mills dips 0.8% as CEO warns on pricing.
4. Reddit flat as Google AI deal talks swirl.
5. Opendoor surges 14.5% on bullish retail flow.
6. Frontier flat after the CEO defended the discount model.
7. Gorilla Technology spikes 13.1% on retail momentum.
8. Eli Lilly slips 0.6% despite obesity pill win.
9. Lyft pops 13.1% on Waymo robotaxi deal.
10. Nvidia drops 2.6% despite China-fueled bull case.
11. Trump faces scrutiny over dual mortgage pledges.
12. Workday climbs 7.2% after Guggenheim upgrade, activist stake.

WHAT’S ON DECK

Tomorrow’s Top Things

Economic data: IEA Monthly Report (4:00 AM), OPEC Monthly Report (7:00 AM), CPI (8:30 AM), Initial Jobless Claims (8:30 AM), 30-Year Bond Auction (1:00 PM), Fed’s Balance Sheet (4:30 PM). 

Pre-Market Earnings: Kroger ($KR), Lovesac ($LOVE), and Cheetah Mobile ($CMCM).

After-Market Earnings: Adobe ($ADBE) and Rent the Runway ($RENT).