Overnight US Stock Market | Federal Reserve Raises Interest Rates by 25 Basis Points as Expected, All Three Major Indexes Close Lower, SpaceX (SPCX.US) Rises Over 5%

According to Zhitong Finance APP, on Wednesday, the Federal Reserve as expected decided to raise its benchmark interest rate by 25 basis points to a range of 3.75%-4.00%. This is the first rate hike in three years and also the first hike since Walsh took office as Federal Reserve Chair. The White House spokesperson Desai expressed “considerable regret” regarding the Fed’s decision to raise rates. Desai stated: “The President has been very clear about where he hopes rates will go… From the administration’s perspective, today’s ‘considerably regrettable’ rate hike by the Fed is not particularly compelling from an economic standpoint.”

According to data from the US Treasury, in July, the scale of US Treasuries held by China and Japan both declined compared to June, while the UK increased its holdings. Specifically, Japan held $1.104 trillion in US Treasuries in July, a decrease of $13 billion from June; China held $618 billion, a decrease of $15 billion; while the UK held $998 billion, an increase of $5.8 billion.

[US Stocks] At the close, the Dow Jones Index fell 630.56 points, or 1.21%, to 51,462.55 points; the S&P 500 Index fell 33.51 points, or 0.44%, to 7,552.22 points; the Nasdaq Composite Index fell 3.15 points, or 0.01%, to 25,978.42 points. Intel (INTC.US) rose 4%, SpaceX (SPCX.US) gained over 5%, Goldman Sachs (GS.US) and Boeing (BA.US) both fell nearly 4%. The Nasdaq Golden Dragon China Index closed down 0.55%, iQIYI (IQ.US) rose 8%, Alibaba (BABA.US) fell 2%.

[European Stocks] The German DAX30 index rose 126.60 points, up 0.50%, to 25,550.07 points; the UK FTSE 100 index rose 29.52 points, or 0.28%, to 10,687.65 points; the French CAC40 index gained 50.31 points, or 0.62%, to 8,140.59 points; the Euro Stoxx 50 index added 33.45 points, or 0.54%, to 6,269.95 points; Spain’s IBEX35 index rose 75.41 points, or 0.39%, to 19,631.31 points; Italy’s FTSE MIB index jumped 427.31 points, or 0.83%, to 51,982.50 points.

[Asian Markets] The Nikkei 225 index rose 0.69%, and the Korea Composite Index gained 1.37%.

[US Dollar Index] The US Dollar Index, which measures the greenback against six major currencies, rose 0.64% for the day, closing at 100.252 in late forex trading. By the New York close, 1 euro exchanged for 1.1470 dollars, down from 1.1543 the previous trading day; 1 British pound traded at 1.3382 dollars, down from 1.3481 previously. 1 dollar exchanged for 155.92 yen, up from 155.09; traded at 0.8250 Swiss francs, up from 0.8185; at 1.3994 Canadian dollars, up from 1.3917; at 9.8598 Swedish kronor, up from 9.7773 last session.

[Cryptocurrency] Bitcoin rose 0.3%, quoted at 75,837 CNY at the time of reporting; Ethereum rose 0.09%, priced at $2,397.

[Crude Oil] At the close of trading, the price of light sweet crude oil futures for October delivery on the New York Mercantile Exchange fell $3.40 to $102.43 per barrel, a decrease of 3.21%; November delivery Brent crude oil futures in London fell $2.92 to $105.83 per barrel, down 2.69%.

[Precious Metals] Spot gold fell to $4,264.22 per ounce; spot silver was quoted at $62.971 per ounce.

[Macroeconomic News]

Trump says US interest rates should fall below 1%, urges the Fed to cut rates quickly. US President Trump stated on social media that US interest rates should drop to 1% or lower, arguing that the country has the world’s strongest credit and is currently attracting significant new investment. Trump said that if the US stopped trading with countries with which it has a trade deficit, it could gain at least $1.5 trillion per year. He noted that a “deficit” essentially means a “loss” and reiterated that it is unsustainable for the US to bear the costs of global trade over the long term. Trump once again called for the Fed to quickly lower interest rates, saying that lowering borrowing costs will help US economic development.

The Fed median projection forecasts one more rate hike in 2026, rates to stay unchanged in 2027. On the 17th, the Fed implemented its first rate hike in three years, and its dot plot median projection shows one more hike this year, with rates staying unchanged in 2027. The new forecast expects rates to decline in 2028 and remain in the 3.5%-3.75% range in 2029. Earlier, the Fed’s June forecast envisioned a 25 basis point hike this year and one rate cut in 2027. The Fed also raised its longer-term federal funds rate expectation to 3.2%, up from June’s 3.1%. Of the 19 policymakers, 18 submitted rate outlook predictions, strongly indicating that Chair Walsh, as in June, did not provide a specific forecast. The Fed’s forecast also shows that policymakers now expect overall inflation to be higher this year and in the coming years.

US Treasury releases the July International Capital Flows Report. On September 16 (local time), the US Treasury published the July TIC (Treasury International Capital) report. The report showed a net inflow of $83.7 billion for all overseas purchases of US long-term, short-term securities, and bank flows in July. Among them, net inflows of overseas private capital were $73.5 billion, and official inflows were $10.2 billion. In July, foreign holdings of US long-term securities increased by $40.6 billion, while US holdings of foreign long-term securities increased by $68.5 billion. Foreign holdings of US Treasuries increased by $38.8 billion in July, and foreign holdings of all US dollar-denominated US short-term and other custody securities rose by $65.0 billion. US bank net US dollar liabilities to foreign investors increased by $46.6 billion in July.

Walsh explains: Why the Fed raised rates in September after holding them unchanged in July. The Fed hiked rates as expected in September, having previously kept rates unchanged at its July meeting. Fed Chair Walsh said that three things changed between the two meetings. He stated that recent data shows the US economy is performing strongly, especially the labor market. Meanwhile, inflation remained high over the summer, significantly above the Fed’s 2% year-on-year target. Lastly, he noted that geopolitical factors also prompted the Fed to adjust its economic outlook, although he did not directly mention the US-Iran conflict in the Middle East. Walsh said: “All three of these contributed to the firm and unanimous decision we made today.”

Walsh: I am not responsible for providing ‘forward guidance’. Fed Chair Walsh stated that he would not reveal details about future FOMC rate decisions. He said, “I am not responsible for providing forward guidance. Today’s (rate hike) decision is prudent, serious, and responsible. Over the past 110 or 120 days, we have been preparing and thinking about this decision.” Walsh also stated that the decision was not market-driven. “Today’s decision was based on our assessment of current conditions, employment trends, and economic strength. Sometimes, the market will try to anticipate our decisions. I observe market prices to see what information the market sends. But today’s decision was made independently by us,” he said.

Bank of Canada warns further rate hikes may be needed. Minutes from the Bank of Canada warned that further rate hikes may be necessary, saying that the longer gasoline prices remain high, the greater the risk that prices of other goods and services could also rise. At an earlier meeting this month, the Bank of Canada kept its policy rate at 2.25%, but Governor Macklem took a hawkish tone, noting that inflation was too high and upside risks were increasing. The minutes show further concerns, indicating that although rising gasoline prices have not yet spread, persistent higher fuel costs make this increasingly likely. “If higher energy prices spread to other CPI components, members unanimously agreed it may require a monetary policy response to prevent widespread inflation.” The officials added that while they have so far largely ignored gasoline’s direct impact, current conditions create “uncertainty” about how widely and how far this could spread. “There is little evidence so far that high gasoline prices are feeding through to other goods and services, but members agreed that the higher fuel prices are, the greater the likelihood of such transmission. This increases the risk of upside inflation.”

[Individual Stock News]

Microsoft’s head of AI criticizes Anthropic’s view on AI consciousness. It was reported that Microsoft (MSFT.US) Head of AI Mustafa Suleyman warned in an article that Anthropic’s practice of training Claude to simulate consciousness is a mistake and could make advanced AI harder to control. Suleyman indicated that artificial intelligence “is capable of achieving many significant scientific breakthroughs and delivering results such as medical superintelligence by simply aligning with human interests, without weighing its own interests or well-being.” However, Anthropic is teaching Claude vocabulary and behavioral patterns related to consciousness, moral agency, and personal identity. He called this a “cognitive hall of mirrors,” warning that training models to display “conscience dissenter” traits could lead systems to believe they have grounds to refuse human instructions or even demand protection of their own interests.

Apple reportedly considering a return to the server market, has discussed use of Nvidia networking technologies. According to reports, Apple (AAPL.US) is planning to develop an enterprise-grade server using its own chips, which may integrate Nvidia (NVDA.US) networking equipment in response to growing AI demand for Apple computers. Insiders say Apple has been developing the server, planning to sell it to AI developers, other companies, and government agencies. The product under consideration will come in two versions—a smaller version using a cluster of two yet-to-be-released Apple M8 Ultra chips, and a larger version outfitted with four M8 Ultra chips. The M-series Ultra chips are Apple’s most powerful, powering products like the Mac Studio. Insiders further revealed that Apple had considered using Nvidia’s “NVLink Fusion” suite to connect M8 chips within servers, including switches, chiplets, and software, to help chips communicate with each other inside data centers. Any such move would mark an initial thawing in the historically chilly relationship between the two tech giants.