On the evening of September 20, Beijing time, the three major US stock indexes opened slightly lower on Friday, maintaining a narrow range of fluctuations in early trading. As of the time of this report,$Dow Jones Industrial Average (.DJI.US)$ down 0.26%, $Nasdaq Composite Index (.IXIC.US)$ down 0.29%, $S&P 500 Index (.SPX.US)$ The market fell by 0.34%. On the previous trading day, the Dow and the S&P 500 index both hit record highs.

This week, the bold 50 basis point rate cut by the Federal Reserve boosted market confidence, believing that the Fed can achieve a soft landing for the economy. However, a warning from FedEx suggests that the economy still faces certain risks. Federal Reserve officials are expected to cut rates by another 50 basis points this year.

"Despite the current market being filled with optimism, there are evidently some underlying concerns," said Jim Reid, a strategist at Deutsche Bank. "In particular, the pace of rate cuts priced in the futures market is more aggressive than implied by the Fed's dot plot on Wednesday. Investors believe that if downside risks materialize, the pace of rate cuts may need to accelerate."

Overnight, Wall Street in the United States finally had time to digest the Fed's first rate cut. With more accommodative policies coming, investors are betting that the U.S. economy will continue to grow, and better-than-expected jobless claims data reinforce the view that the labor market remains healthy.

The market expects a 40% probability of another 50 basis point rate cut by the Federal Reserve in November, and it is expected to cut rates by another 73 basis points by the end of the year. It is expected that by the end of 2025, interest rates will reach 2.83%, which is considered the Fed's neutral rate expectation.

Beware of Triple Witching Day, as the market faces a $5.1 trillion challenge.

It is worth noting that this Friday is also traditionally known as 'Triple Witching Day' - a large number of derivative contracts related to stocks, index options, and futures will expire, which usually intensifies market volatility. Also after the market closes today, it is a node for the U.S. stock indices to adjust their weights, meaning there will be hundreds of billions of dollars rapidly changing hands in the last few minutes before close.

According to derivatives analytics company Asym 500 estimates, around $5.1 trillion of index, stocks, and ETF options will expire on Friday. Due to investors and traders needing to adjust their positions before these contracts expire, the market often experiences significant volatility and increased trading volume around the 'triple witching hour.'

This 'triple witching hour' comes at a critical moment in market positioning. Matt Thompson, Co-Portfolio Manager at Little Harbor Advisors, said, 'The 'triple witching hour' may inject more volatility into the market, we just don't know which direction.' 'Regardless of the market's view on Fed rate cuts, the large amount of options expiring on Friday will exacerbate that view.'

Carlyle Group warns: Inflation risks are rising, 4.5% may become the new normal.

Jason Thomas, Head of Global Research and Investment Strategy at Carlyle Group, warns investors to prepare for a potential inflation resurgence, as this could lead Fed officials to maintain interest rates around 4.5%.

Thomas believes that despite the current high level of interest rates, after the 50 basis point rate cut by the Fed this week, the central bank is likely to cut rates at least two more times.

However, as industries that have been stagnating due to rising borrowing costs begin to recover strongly, the world's largest economy may face new price pressures. He further pointed out, 'While there will certainly be more rate cuts, I believe the scope of the cuts will be smaller than what the market expects.'

Key sectors & stocks

Uranium mining stocks lead the gains, with Cameco and Centrus Energy up about 6%, NexGen Energy and Uranium Energy up over 4%, Denison Mines and Energy Fuels up over 3%.

The public utilities sector as a whole rose, with Vistra Energy up nearly 8%, TransAlta up over 3%, and Talen Energy up nearly 3%.

$Nike (NKE.US)$ Rose more than 8% in early trading, now up over 6%, company veteran Elliott Hill will succeed John Donahoe as chief executive officer.

$Novo-Nordisk A/S (NVO.US)$ Dropped more than 5%, the company announced the results of Phase 2A clinical trials of the new drug Monlunabant for the treatment of obesity. The additional weight loss effect after taking high doses of the drug is limited.

$FedEx (FDX.US)$ Dropped over 14%, marking the largest decline since September 2022, as the company lowered its revenue and profit guidance for the fiscal year.

$Constellation Energy (CEG.US)$ Rising more than 15%, the company announced a 20-year power purchase agreement with Microsoft.

Editor/rice