[US Stock Flash: 9/17] The Rate Hike Is Finally Announced! Why Did Stock Prices Plummet? A Thorough Dissection of the FOMC and Investment Strategies to Survive the Turbulent Market

🚨 Today’s US Stock Market: Stock Prices Plummet Following Rate Hike Announcement!

The US stock market closed on Wednesday, September 16.

Today’s stock market was a turbulent day as the FOMC (Federal Open Market Committee), which everyone was watching, announced its policy interest rate. As expected, a 25 basis point (0.25%) rate hike was decided, raising the policy rate to 3.75%–4.00%. Furthermore, the market is pricing in one more additional rate hike before the end of the year.

After the Fed Chair’s press conference, the US 10-year Treasury yield rose again, and the stock market, unable to withstand the pressure, turned downward.

[Closing Prices of Major Indices]

• Dow Jones Industrial Average: $51,461.90 (-1.21%)

• S&P 500: 7,551.81 (-0.45%)

• NASDAQ: 25,978.42 (-0.01%)

• Russell 2000: 2,858.81 (-0.40%)

[Commodities, Currencies, and Crypto Assets]

• WTI Crude Oil: $102.12 per barrel (-3.51%)

• Gold: $4,309.80 (-0.53%)

• USD/JPY: 156.37 yen (+0.82%)

• Bitcoin: $75,640 / Ethereum: $2,412

[US Treasury Yields]

Although the 10-year Treasury yield had fallen to around 4.95% in the evening (Japan time), it jumped back into the 5% range after 3:30 AM when the Chair’s press conference began.

📈 Individual Stocks & Heatmap: Notable Stocks Shining Amidst the Dark Clouds

Today’s market started with a wait-and-see mood before the FOMC, drifted lower after the policy rate announcement, and expanded its losses during the Chair’s press conference (with some buying back just before the close). Even so, there were notable stocks that were bought due to their own positive news.

• Intel: Rose on reports of discussions regarding semiconductor memory manufacturing with South Korea’s SK Hynix.

• GE Vernova: Remained firm, supported by strong demand for power equipment and a bullish outlook projecting a backlog of $200 billion by early 2027.

However, while semiconductor-related stocks and large-cap tech stocks were firm at the start, they could not withstand the pressure from rising interest rates, ending the trading session with reduced gains or losses.

🔥 FOMC Thorough Dissection: The Truth Behind the Unanimous Rate Hike and the ‘Hawkish’ Stance

At this FOMC meeting, a rate hike—the first since July 2023—was decided unanimously. Market interest is focused on whether this marks the beginning of a series of consecutive rate hikes.

1. Revision of the Dot Plot (Interest Rate Outlook)

The interest rate forecasts provided by the participants (18 out of 19) were raised across the board.

• End of 2026: Rose from the previous 3.8% to 4.1%

• End of 2027: Rose from the previous 3.6% to 4.1% (a scenario where the hike stops after this one and the next)

• End of 2028: Fell to 3.9% (anticipating one rate cut here)

• Long-term target: 3.2%

2. Upward Revision of Economic Projections (SEP)

• Real GDP: This year’s forecast was raised from 2.2% to 2.3%, and 2027 is also projected at 2.4%, demonstrating the resilience of the US economy.

• Unemployment rate: Expected to fall from 4.3% to 4.1% (maintaining strong employment).

• Core PCE inflation: This year’s forecast was revised upward from 3.0% to 3.4%. However, it is expected to gradually settle to 2.5% in 2027 and 2.2% in 2028.

3. Changes in the Statement and the Chair’s Press Conference

The statement was significantly shortened compared to the previous one, noting that ‘domestic spending has resilience and productivity is strong’ and ‘capital investment is solid,’ while adding a sentence stating that it ‘supports an early return to the Fed’s 2% target.’

Furthermore, in the press conference, which lasted only 28–29 minutes, the Chair emphasized that ‘inflation is too high and has been for too long.’ It was revealed that this is a preemptive rate hike to prevent ‘cost-push inflation,’ where rising energy prices such as crude oil spill over into other goods and wages. The Fed indicated a stance of not making decisions in advance, but rather judging based on future economic data.

🛍️ August Retail Sales: Consumer Resilience Far Exceeding Expectations

August US retail sales, which were watched alongside the FOMC, came in with strong figures that significantly exceeded market expectations.

Retail Sales (MoM): 1.2% result against a 0.9% forecast (a significant recovery from the previous -0.5%)

Core Retail Sales (excluding autos): 1.4% result against a 0.5% forecast (the largest growth in 5 months)

Low unemployment and rising stock prices have supported household budgets, leading to explosive growth in spending at general merchandise stores, clothing retailers, and electronics stores ahead of the new school year. While the strength of the economy is encouraging, it can also be a factor that reignites inflation. The Fed is prepared to proceed with gradual rate hikes to find the ‘perfect balance’ of tightening while avoiding a recession.

🤖 NVIDIA and the Future of AI: Overwhelming Growth Power That Blows Away Short-Term Noise

As the market is shaken by the rate hike shock, what long-term investors should focus on is the overwhelming reality of the AI sector.

Jensen Huang, CEO of NVIDIA, which leads the pack, shows absolute confidence, stating, ‘I don’t take any risks. There is no anxiety about AI investment.’

Phenomenal earnings growth: Despite boasting a market capitalization of $5 trillion, it expects 70% growth next year (it would have grown even more if not for supply constraints). In the next earnings report, quarterly revenue is expected to exceed $100 billion for the first time in history (it was only $7.2 billion in the February-April 2024 period).

Aggressive investment strategy: Through its venture capital division, it has invested in 96 companies and holds approximately $50 billion in equity. It has not eased up on efforts such as its partnership with Taiwan’s MediaTek and the acquisition of AI startup Hugging Face.

While some on Wall Street fear a ‘peak out in capital expenditure,’ industry leaders assert that ‘the AI revolution has only just begun.’ The fundamental value of companies is steadily increasing, and a long-term perspective that is not swayed by short-term stock price fluctuations is needed now more than ever.

💵 Currency Market: A Dollar-Only Rally Aiming for 160 Yen Again!?

In the currency market, the dollar was bought across the board, and the dollar-yen pair surged from the low 155 range to the high 156 range (dollar appreciation).

Changes in market structure: As the Fed enters a full-scale rate hike phase, the focus of the discussion has shifted from ‘will they hike rates’ to ‘how many more times will they hike rates.’

Dollar-only rally: Although there are expectations for additional rate hikes by the Bank of Japan, the strength of the dollar stands out among major currencies.

Technical analysis: After a sharp drop from the 160 range at the beginning of September to 153, it has already achieved a 38.2% retracement. It is now moving to test the 50% retracement (mid-to-high 156 range), and as the saying goes, ‘a half-price return is a full-price return,’ the possibility of returning to a trend aiming for 160 again is increasing.

🔮 Future Outlook and Summary: Investment Strategies to Survive a Volatile Market

Finally, I will summarize today’s market trends and key points for the future.

Strong vigilance toward additional rate hikes: The market has raised the probability of an additional rate hike at the next meeting to 53.14% and to 71.89% for the December meeting, beginning to price in the risk that tightening will last longer than the Fed’s outlook.

Short-term downward pressure on stock prices: With the midterm elections approaching, the stock market is expected to remain difficult to rise and continue to have high volatility in the short term.

Do not lose sight of long-term growth themes: Instead of panicking and selling off due to the immediate interest rate shock, the key to success is to patiently face companies with solid growth potential and innovation, such as NVIDIA.

When the market is turbulent, keeping your eyes on the market and continuing to update with correct information will lead to significant future asset formation. Let’s continue to check the latest news and steadily improve our investment skills!

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