【US Stock Market Outlook for the Week of 9/14–9/18: Caution Regarding the Shift in Rate Hike Phases and Prolonged High Interest Rates: The Message Sent to Individual …

The US stock market is facing a major turning point. Movements surrounding decisions at the FOMC (Federal Open Market Committee) and monetary policy are intensifying.

Review of Last Week

Last week, the US market was a very volatile week centered on major monetary policy meetings. The three main topics that influenced the stock market and the stock price reactions are as follows.

FOMC Decision for a 0.25% Rate Hike and Hawkish Message

At the FOMC meeting on Wednesday the 16th, the FRB (Federal Reserve Board) unanimously decided to raise the target range for the policy interest rate (FF rate) by 0.25% to 3.75–4.00%.

This is against the backdrop of inflation rates continuing to exceed the 2% target and the resilience of energy prices.

Chair Powell emphasized in a press conference that “inflation remains too high… and for too long,” strongly suggesting the possibility of additional rate hikes within the year.

Following this decision and the hawkish remarks, concerns about rising interest rates surged in the market, and the Dow Jones Industrial Average was sold off heavily after the announcement, acting as a weight on the entire stock market.

US 10-Year Treasury Yield Reaching 5.0% and Pressure on Stock Prices

Along with the rate hike decision, yields rose in the bond market. In particular, the 10-year Treasury yield was seen hitting the 5.0% mark, which resulted in strengthening the relative overvaluation of stocks.
Selling was led by large-cap tech stocks sensitive to rising interest rates, which became a factor in capping the upside for the S&P 500 and the Nasdaq Composite Index.

High Volatility Associated with Quadruple Witching

Friday the 18th was the day of “Quadruple Witching,” where the expiration dates for four types of instruments—stock index futures, stock index options, individual stock options, and individual stock futures—coincide. Trading volume surged due to institutional investors adjusting their positions, and sharp fluctuations in stock indices were notable toward the end of the trading session. As a result, the overall market direction remained uncertain, and major indices ended the week with mixed results.

This Week’s Notable Earnings and Important Economic Indicators/Events

This week, the release of economic indicators to confirm the resilience of the economy after the rate hike, as well as earnings announcements from companies that are extremely important for gauging consumption trends, are scheduled.

【Earnings Schedule for Notable Companies】

This week, the most anticipated event is the earnings announcement for Costco Wholesale (COST) to be released after the market closes on Thursday the 24th. The focus will be on whether the company’s strengths—its membership model and low-price strategy—continue to garner support from consumers in an environment of persistent high inflation.

＜今週の主要・注目企業決算＞
22日（火）:
🅱️ソア・インダストリーズ、オートゾーン
🅰️KBホーム
23日（水）:
🅱️ゼネラル・ミルズ、ペイチェックス、シンタス
24日（木）:
🅱️ダーデン・レストランツ
🅰️コストコ・ホールセール https://t.co/SsWVRwoE6v

— アメリカ企業リサーチラボ (@US_Research_Lab) September 20, 2026

【Notable Economic Indicators and Events】

• Wednesday, September 23rd
  S&P Global US PMI (Purchasing Managers’ Index, Preliminary)
  This is an indicator showing business sentiment in the manufacturing and service sectors. As inflationary pressures continue, it will test whether companies can maintain expansion in business activities and new orders.

• Thursday, September 24th
  Initial Jobless Claims
  This is weekly data measuring the health of the labor market. As the Fed continues to raise rates, whether the employment environment is beginning to cool or maintaining resilience will influence interest rate outlooks.

• Friday, September 25th
  August Durable Goods Orders (Preliminary)
  Durable goods orders, a leading indicator for capital investment, will serve as a barometer for whether companies are maintaining their willingness to invest in equipment despite the increased burden of interest rates.

The most notable theme this week: The entrenchment of high interest rates and the upside risk to the ‘terminal rate’.

The most notable theme this week is the ‘revaluation (multiple compression) of the stock market due to the Fed’s policy interest rates remaining high for a prolonged period or being raised further’.

At last week’s FOMC, along with the policy rate hike, the median of the participants’ dot plot (interest rate forecast) was raised to 4.1% by the end of this year.

As a result, the view that ‘the rate-cutting cycle that continued from 2024 to 2025 has ended, and we have entered a phase where interest rates will remain high or rise again’ has become a realistic prospect.

The main impacts of entrenched high interest rates on the stock market are the following three points:

• Valuation adjustment pressure (downward pressure on P/E ratios)
  When the yield on risk-free assets like government bonds rises to around 5%, higher earnings yields are demanded of the stock market.
  As a result, growth stocks that were bought at high P/E (price-to-earnings) ratios, particularly those pricing in future growth, are more susceptible to valuation adjustment sell-offs.

• Increased corporate financial costs
  Because the interest payment burden on borrowings increases, this negatively impacts the performance of companies with high debt ratios or those that have funded share buybacks with debt.
  On the other hand, mega-tech companies with abundant cash on hand are considered to have strong financial resilience.

• Impact on foreign exchange (dollar-yen)
  Since the interest rate differential between Japan and the US is widening further, pressure for a stronger dollar and weaker yen is likely to be maintained in the foreign exchange market.
  However, since vigilance regarding currency intervention by Japanese authorities also increases against excessive yen depreciation, attention must be paid to rising volatility.

Since many speeches by Fed officials are scheduled for this week, the biggest focus will be on how the market prices in the terminal rate while confirming each official’s stance on monetary tightening.

Advice and points of caution for Japanese investors

For individual investors in Japan, the shift in US monetary policy and fluctuations in exchange rates are directly linked to the performance of their portfolios. From the perspective of a financial planner, I will provide advice on practical actions to take now and points to be aware of.

1. Be wary of exchange rate risk (strong dollar/weak yen) and the valuation trap

In US stock investments, as the yen weakens, the yen-denominated valuation inflates.
However, a state where ‘the stock price itself is falling, but it looks positive thanks to the weak yen’ carries the risk of turning into a large loss when the exchange rate trend reverses (for example, due to additional rate hikes by the Bank of Japan or a US economic recession).

It is important to separate and understand whether current profits are due to ‘stock growth’ or ‘exchange rate effects’.

2. Improve the quality of your portfolio (shift to high-quality companies)

In a high-interest-rate environment, not all stocks are bought equally. I recommend increasing your allocation to ‘high-quality companies’ that have the following characteristics:

• Solid balance sheet (high equity ratio and no unnecessary debt)

• High pricing power (brand strength or technical capabilities that allow for passing on high costs)

• Abundant free cash flow (ability to stably generate cash from business)

The interest rate hike decided last week means an increase in financing costs. This is a good time to consider rotating out of loss-making tech companies and small-cap stocks that have low free cash flow and are being bought solely on expectations of future profits.

3. Continuation of Accumulation Investment (Dollar-Cost Averaging) and Securing a ‘Cash Position’

In phases where the market fluctuates wildly, continuing to faithfully perform ‘monthly fixed-amount accumulation (dollar-cost averaging)’ using accounts like NISA is the most effective risk management, rather than making lump-sum investments.
Also, by securing about 10-20% of your portfolio as ‘cash ready to be deployed at any time (MMF or dollar-denominated cash)’ in preparation for sudden market adjustments (downturns), you can gain psychological breathing room and opportunities to buy the dip.

The US stock market this week will be a time to assess the pricing in of interest rates following the hike and to confirm the reality of economic and corporate performance. Do not be swayed by short-term stock price noise; instead, stay committed to diversified investment in companies with strong financial foundations in line with your long-term asset formation goals.