Fed Hikes Again as AI Leaders Defy Gravity

Andrew@CANSLIM RESEARCH

The Fed Reopens a Door Wall Street Thought Was Closed

The Fed raised rates by 25 basis points to 3.75%–4.00%. This was the first hike since 2023. It was also Chair Kevin Warsh’s first meeting. The vote was unanimous at 12-0. The statement said inflation “remains elevated.” The dot plot pointed to one more hike this year. Rate cuts are off the table for now. Stocks sold off on the news. The Dow fell 600 points and closed down 1.15%. SPY closed at 754.05, down 0.44%. It dipped to 749.68 intraday, then recovered. QQQ finished almost flat at +0.01%. IWM lost 0.43%. Treasury yields jumped. Traders now price in more tightening ahead.

A Hawkish Fed Squeezes Global Commerce

A tighter Fed usually lifts the dollar. That raises funding costs for global trade. It pressures emerging markets and weak currencies. But this dollar boost may be capped. Other central banks are also tight. Energy adds a second inflation tax. Oil is near $100 as Saudi Arabia reroutes crude. Asian LNG demand is falling for a second year. High prices are forcing buyers to pull back. The next tests: Does the Fed hike again? Do oil and gas keep feeding inflation? Does the selloff turn durable?

The Overnight Crowd Refuses to Blink

Global social sentiment flipped fast. By 00:53, SPY traded at 758.42, up 0.58% from the close. QQQ rose 0.72%. IWM added 0.62%. The online crowd turned wildly bullish. A strange slogan spread: “rate hikes are bullish.” The logic had three parts. First, Warsh showed independence from the White House. Second, FOMC uncertainty is gone. Third, a small hike cannot break inflation. Bears were mocked all night. Fear/Greed hit 7.5/10. But the greed looked forced, not confident. Many top comments called this “the dumbest market in history.” Others expect “one more euphoric rally before the real rug pull.”

AI Infrastructure Is Where the Money Sleeps

The AI complex led the overnight bounce. NBIS closed at 209.29 (+0.94%), then jumped to 224.04 overnight (+7.05%). GPU price hikes and a lower credit spread fueled the story. Positioning is very concentrated. One trader sold all AMZN and moved everything into NBIS. Others target 230. Bears warn of a gap-down open. ORCL gained 2.08%, then 1.52% more overnight. Bloom Energy rose 4.27%, then 2.99%. INTC gained 4.02% to 101.02. SOXX added 0.64%, then 0.90%. This is where the risk sits Thursday morning.

Politics, Tariffs and Crypto Add Static

Noise came from every direction. Trump said Canada joining the EU as an associate member would be a “hostile act.” He threatened heavier tariffs on Europe. He also demanded rates at 1% or lower. He said he told Warsh, “You might as well vote with the board.” That line dominated discussion. The House passed a Russia sanctions bill allowing tariffs up to 100% on countries like India. The CLARITY Act stalled. BTC fell over 5% to about 76,000 before steadying.

The Weakest Chart Sits Overseas

One chart stands out for the wrong reason: EU. It shows the weakest technical pattern in the group. While SPY and QQQ recovered, EU did not lead. That fits the macro backdrop. A strong dollar and higher funding costs hit foreign markets first. If global tightening caps the dollar, that helps. But right now, EU is a warning light. Growth investors should watch it closely. Weak foreign action often spreads to U.S. risk appetite.

Leaders Hold While the Tape Stays Fragile

The major indexes did not collapse. QQQ held flat. SPY bounced off its low. AI names rallied overnight. That is constructive. But breadth is thin. The rally leans on a few leaders. Volume and follow-through still matter. A single strong session proves little. Remember 2022: after the first hike, SPY fell for two months. The telecom bubble took nine months to break. Watch the follow-through day. Watch NBIS at the open. Watch EU for global stress. If leaders hold and volume confirms, the uptrend survives. If not, the crowd’s forced greed may be the last thing standing.

Sources: market news brief & global social sentiment data. Updated 2026-09-17 14:00 HKT. For educational purposes only — not investment advice.