The Federal Open Market Committee (FOMC) meeting of the Federal Reserve started on Tuesday, with US retail sales and factory output data in August both exceeding expectations, the economy...But after the bursting of the internet bubble and the Fed's rate cut in 2001, the ROI dropped by more than 10%.Additional evidence shows that investors are contradictory about the extent of the interest rate cut. Nick Timiraos, a financial journalist known as the 'New Fed News Agency,' stated that the situation is complex and the extent of the Fed's initial interest rate cut is still uncertain. The extent of the rate cut (25 basis points or 50 basis points) will depend on how Fed Chairman Powell weighs various factors.

'New Bond King' Gundlach believes that the Fed is likely to cut interest rates by 50 basis points on Wednesday, while JPMorgan CEO Dimon believes that the Fed will cut rates, but the extent 'won't be earth-shattering,' and the probability of a significant 50 basis point rate cut by the Fed in September is still around 63%.

After the release of retail sales data, the US dollar and US Treasury yields rose together, with short-term yields rising more significantly, depressing gold prices by over 0.8%, the yen fell over 1.2% and dropped below 142, and offshore yuan fell 140 points, breaking below 7.11. The strong economy initially boosted US stocks, but due to the majority of investors remaining on the sidelines, US stocks rose and then fell back, with the final stages of trading ending nearly flat, with only small-cap stocks performing well, up 0.74%. Geopolitical tensions continue to escalate, and rising oil prices boosted the energy sector to the front.

The two-day FOMC monetary policy meeting of the Federal Reserve began as scheduled at 10:30 AM Eastern Time on Wednesday (10:30 PM Beijing Time). Investors are waiting for the Fed's September interest rate decision statement, the Summary of Economic Projections (SEP) for the quarter, and Chairman Powell's press conference. Investors are also focusing on the Bank of England meeting on Thursday.

U.S. retail sales data boosted the early trading of U.S. stocks, with small-cap indices leading the way with a rise of over 1.8%, the Nasdaq rising nearly 1.1%, and the S&P 500 up nearly 0.7%. The Dow also hit an intraday record high, climbing over 0.5% or 213 points. After about 1.5 hours of trading, major stock indices surged and then retraced, with the Dow, S&P, Nasdaq, and Nasdaq 100 all briefly turning negative. In the end, only the Dow fell, and the S&P narrowly rose for a seventh consecutive day.

• The three major U.S. indices: the S&P 500 index closed up 1.49 points, or 0.03%, at 5634.58. The Dow, closely tied to the economic cycle, fell 15.90 points, down 0.04%, to 41606.18. The Nasdaq, with a majority of tech stocks, rose 35.93 points, up 0.20%, to 17628.06. The Nasdaq 100 rose 0.05%, and the Nasdaq Tech Market Cap Weighted Index (NDXTMC), which measures the performance of Nasdaq 100 tech sector stocks, rose 0.10%. The more economically sensitive Russell 2000 index rose 0.74%. The VIX, the fear index, rose 2.80% to 17.62.
  

At the close, only small-cap stocks were up 0.74%, leading the way, while other major stocks were nearly flat (Nasdaq up 0.2%, Dow down 0.04%, S&P up 0.03%, Nasdaq 100 up 0.05%).

• U.S. stock industry ETFs saw mixed performance. The global aviation industry ETF rose 1.81%, the energy industry ETF rose more than 1.3%, regional bank ETF, bank industry ETF, financial industry ETF, and consumer discretionary ETF rose by at least 0.8%, the semiconductor ETF fell by less than 0.1%, the technology industry ETF and global technology stock index ETF fell by at least 0.2%, and the medical industry ETF fell by 1.03%.

• The 11 sectors of the S&P 500 index had mixed performance. The healthcare sector fell by over 1%, the information technology/tech sector fell by 0.09%, the telecommunications sector rose by over 0.4%, the financial sector rose by over 0.5%, the consumer discretionary sector rose by over 0.6%, and the energy sector rose and fell by 1.41%.

• "The Magnificent 7" only saw a drop in Nvidia. Amazon rose 1.08%. Microsoft rose 2.4% before closing up 0.88%, while Blackrock and Microsoft plan to establish a $30 billion fund focused on AI infrastructure investment, with professional support from Nvidia. Google parent Meta rose 0.8%, Tesla rose 3.4% before closing up 0.48%, and Apple stopped falling to rise by 0.22%. JPMorgan is in advanced negotiations with Apple, potentially taking over Apple's credit card project from Goldman Sachs. However, Nvidia fell by 1.02%.
  

• Chip stocks showed mixed performance. The Philadelphia Semiconductor Index rose 1.4% before closing up 0.03%. Industry ETF SOXX closed up 0.12%; Nvidia double long ETF fell 1.99%. Intel rose 8% before closing up 2.68%, Micron Technology closed up 1.78%, ON Semiconductor closed up 1.49%, Qualcomm closed up 1.25%, KLA Corp closed up 0.43%, ASML Holding ADR closed up 0.33%, while AMD fell 0.83%, Marvell Technology fell 0.86%, Broadcom fell 0.95%. Taiwan Semiconductor in the US market fell 1.02%, ByteDance reportedly teamed up with Taiwan Semiconductor to develop its own 5nm AI chips, expected to start mass production by 2026. Arm Holdings fell 1.13%.

• AI concept stocks showed mixed performance. Oracle fell 1.68% off the highest level, Serve Robotics fell 8.37%, BullFrog AI fell 2.64%, Super Micro Computer fell 2.16%, Snowflake fell 1.07%, while CrowdStrike rose 0.34%, Palantir rose 0.39%, Dell Technologies rose 1.23%, C3.ai rose 0.21%. BigBear.ai rose 1.27%, SoundHound AI, an AI voice company in which Nvidia holds shares, rose 0.84%.

• China concept stocks significantly outperformed the overall US market. The Nasdaq Golden Dragon China Index rose 1.83%. In ETFs, China Technology Index ETF (CQQQ) rose 1.12%. China Concept Internet Index ETF (KWEB) rose 1.29%.

• Among popular China concept stocks, Li Auto rose 12.28%, Xpeng rose 2.35%, XPeng Auto rose more than 6% before closing up 1.46%, NIO rose more than 5% before closing up 0.19%, New Oriental rose 3.52%, Bilibili rose 3.2%, JD.com rose 2.36%, Baidu rose 1.56%, Meituan ADR rose 1.42%, Alibaba rose 1.32%, Pinduoduo rose 1.21%, Vipshop rose 0.7%, Tencent Holding ADR rose 0.54%, NetEase rose 0.31%, while Trip.com fell 0.3%.

Ahead of the Fed and Bank of England meetings this week, European stocks rebounded from Monday's decline, with European technology stocks generally rising. Infineon Technologies rose more than 3%, European defense stocks lost steam:

The pan-European Stoxx 600 Index rose 0.40% to 517.19 points. Bank stocks rose 1%, with Deutsche Bank briefly rising nearly 1.7% to its highest level in 12 years. Reports suggest that UBS is seeking approval from the European Central Bank to increase its stake in the company by 30%. Reports suggest that allies of Ukraine are considering a ceasefire proposal, with European defense stocks showing their worst intraday performance in five months.

The German stock index rose 0.50%. The French stock index rose 0.51%. The Italian stock index rose 0.63%. The Spanish stock index rose 1.06%. The UK stock index rose 0.38%, and the Netherlands AEX index rose 0.51%.

The Federal Reserve policy meeting opens, US retail sales data better than expected, the 20-year US Treasury auction is bleak, US bond yields rise across the board, short-term US bond yields rise more than 4 basis points, deviating from the two-year lows, and 10-year and 30-year yields rebound from the lowest levels in over a year before the US stock market opens.

• US bonds: At the end of the day, the yield on the two-year US Treasury, which is more sensitive to monetary policy, rose by 4.14 basis points to 3.5923%, with trading ranging from 3.5381% to 3.6153% during the day. The yield on the benchmark 10-year US Treasury rose by 2.24 basis points to 3.64%. After the US retail sales data was released at 20:30 Beijing time, it fell to 3.5952%, approaching the bottom of 3.5950% on June 1, 2023, and the bottom of 3.2477% on April 6 of that year.

• On the news front, on Tuesday, September 17, on the eve of the Federal Reserve interest rate decision in September, the US Treasury auctioned off $13 billion 20-year Treasury bonds. Overall, the auction results were poor, with demand far below expectations.

• Most European bond yields rose: German 10-year benchmark bond yield rose 2.1 basis points. German two-year bond yield rose 4.5 basis points. French 10-year bond yield rose 2.9 basis points, Italian 10-year bond yield rose 2.0 basis points. UK 10-year bond yield rose 0.7 basis points, UK two-year bond yield rose 3.6 basis points.
  

The US dollar index DXY rose 0.2%, the yen fell more than 1.2% and fell below 142, breaking the one-year high, offshore renminbi fell 140 points and fell below 7.11 yuan, and Bitcoin rose above $0.06 million.

• US dollar: The basket of currencies measuring against six major currencies, the US dollar index DXY rose 0.25% to 101.015 points, with an intraday trading range of 100.567-101.028 points. After the release of US retail sales data at 20:30 Beijing time, there was a significant increase.

• The Bloomberg Dollar Index rose 0.19% to 1224.75 points, with an intraday trading range of 1221.36-1225.79 points.
  

• Non-US currencies fell across the board: the euro fell 0.16% against the US dollar to 1.1115; the British pound fell 0.40% against the US dollar to 1.3164; the US dollar rose 0.23% against the Swiss franc to 0.8470; among commodity currencies, the Australian dollar rose 0.06% against the US dollar, the New Zealand dollar fell 0.25% against the US dollar, and the US dollar rose 0.07% against the Canadian dollar.

• The Japanese yen broke below 142: the Japanese yen fell 1.25% against the US dollar to 142.36 yen. In early Asian trading, the yen rose nearly 0.2% to 140.322, then continued to fall, hitting a low of more than 1.3% to 142.47 yen at the end of the day. The yen fell 1.09% against the euro to 158.24 yen; the yen fell 0.85% against the British pound to 187.398 yen.

• Offshore yuan: the offshore yuan (CNH) fell 140 points against the US dollar at the end of the session, to 7.1110 yuan, with overall trading ranging from 7.0926-7.1117 yuan.

• Cryptocurrencies rose collectively. The largest cryptocurrency, Bitcoin, rose 3.82% at the end of the day to $60,200, reaching a high of over 5.5% and breaking through $61,000 at one point. The second largest cryptocurrency, Ethereum, rose 3.03% at the end of the day to $2,347.50. In support of the cryptocurrency industry, the Trump family officially disclosed details of the World Liberty Financial cryptocurrency project, with 63% available for public purchase.

The optimistic sentiment from the Fed's interest rate cut and the escalation of geopolitical risks, such as the favorable impact of the explosion in Lebanon, led to a rise of about 1.6% in US oil, setting a new two-week closing high.

• US oil: WTI crude oil futures for October closed up $1.10, up nearly 1.57%, at $71.19 per barrel, approaching the August 30th closing level of $73.55, which dropped to $65.75 on September 10th. European stocks initially fell nearly 0.7% to break through $70, then continued to rise, with US stocks rising by over 2.6% at midday, approaching the $72 level.

• Brent crude oil futures for November closed up $0.95, up over 1.30%, at $73.70 per barrel, approaching the September 2nd closing level of $77.52, which dropped to $69.19 on September 10th. European stocks initially fell nearly 0.8% to break through the $72 level, then continued to rise, with US stocks rising by over 2.1% at midday, surpassing the $74 level.

• According to CCTV news reports, on the 17th local time, Hezbollah issued a statement, claiming that Israel is fully responsible for a series of pager explosion incidents that occurred throughout Lebanon that day, stating, 'Israel will be punished for this.' The previous pager explosion had caused 8 deaths and 2,750 injuries, causing minor injuries to the Iranian ambassador to Lebanon.

• Natural gas: US October natural gas futures fell by over 2.06%, to $2.3240 per million British Thermal Units.
  

The US dollar and US bond yields rose together, suppressing spot gold to fall by more than 0.8%, bidding farewell to the historical high of $2589.35 set on September 16th, but still holding above $2560. Silver prices failed to reach a two-month high:

• Gold: COMEX December gold futures fell by 0.52% at the close, to $2595.3 per ounce. Spot gold initially rose slightly, with pre-European stock market trading reaching a high of nearly 0.2% at $2586.99, before falling continuously. At midday, US stocks fell to a low of over 0.8% to $2560.9, dropping from the historical high of $2589.35 set on September 16th.

• Silver: COMEX December silver futures fell by 0.39% at the close, to $31.015 per ounce. Spot silver rose by over 0.8% in early US stock trading, approaching $31, then accelerated its decline, dropping by over 0.7% to just under $30.50 at midday.

• On the news front, Goldman Sachs stated that if the Fed chooses to cut interest rates by 25 basis points this week, gold prices may face a minor pullback in the short term. However, after that, due to the Fed's rate cut pushing Western funds back into gold ETFs, gold prices are expected to reach new highs, with an estimated early next year of $2700 per ounce.

• London's industrial base metals generally fell. The 'Copper Doctor' index fell by $20 to $9370 per tonne. LME zinc fell by $20, LME aluminum fell by $4, LME nickel fell by $96, LME tin fell by $74, and LME lead fell by $20.
  

Editor / jayden