橙子Joyce

Will the Federal Reserve raise rates as expected this week? Wall Street is debating: will it end the U.S. stock bull market?

After an unexpectedly strong U.S. CPI report came out last Friday, traders generally expect the Federal Reserve to begin raising rates at this week’s policy meeting—marking the first rate hike in more than three years.

Historically, previous rounds of rate hikes have offered a reference point for today’s market. Based on past experience (though history of course can’t guarantee the future), U.S. stocks may first weaken, then rebound.

Among the six tightening cycles since 1994, during the first four months after the rate-hike cycle began, the S&P 500’s average return was negative.

This suggests that once the “rate-hike shoe” drops, U.S. stocks may look lackluster through the beginning of next year.

As of the close last Friday, the benchmark U.S. equity index, the S&P 500, is up nearly 12% year to date. Strong corporate earnings and a fairly resilient economy have provided solid support for bulls in the stock market.

If you extend the time horizon, the S&P 500’s performance tends to improve gradually: in the 12 months after the start of a rate-hiking cycle, the index’s average return is close to 7%, with a median return of about 11%. (Using median-based statistics helps remove distortions from extreme outliers—for example, the index surged more than 40% after hikes began in March 1997.)

If the Federal Reserve implements a rate hike this Wednesday, it will be the first hike since July 2023—when the Fed raised rates to a range of 5.25% to 5.50%.

Currently, the federal funds rate in the U.S. is at 3.50% to 3.75%. According to the CME Group’s FedWatch tool, futures traders currently assign an 86% probability to a 25-basis-point hike this week.

One positive factor for the market is that mega-scale cloud service providers are still driving growth in excess returns through large-scale AI spending. The S&P 500 component stocks’ forecast for earnings growth in 2027 is expected to reach double digits. If the outlook for AI spending remains unchanged, it may be enough to offset any cooling in optimistic sentiment caused by the rate hikes.

Another bright spot for equities is that although inflation remains sticky, it appears to be slowing. The inflation rate has fallen from a May peak of 4.2%. This should allow the Federal Reserve to take a more gradual approach, and the data shows that the pace of rate hikes is crucial for stock performance—slower pacing gives investors more time to absorb policy changes!
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Energy

Landmark bill rejected, crypto market faces major negative pressure.

On September 15 in Eastern Time, the U.S. Senate voted to block the advancement of the “Clarity Act” (the Digital Asset Market Structure Clarity Act). This dealt a significant blow to the crypto industry’s efforts to establish a comprehensive market-structure framework. The final vote was 50 in favor and 49 against—far below the 60 votes required to overcome procedural obstacles.

Although the bill went through more than a year of negotiations, the two parties ultimately failed to bridge their differences on key provisions. A major reason cited by Democratic lawmakers is the bill’s ongoing controversy over conflict-of-interest provisions involving Trump’s cryptocurrency business interests. The bill would create a major loophole in nearly a century of securities laws—allowing non-crypto companies to put assets on-chain to evade investor protections, and enabling banks to use customer deposits for crypto lending, trading derivatives, operating nodes, and selling related software.

The bill aims to provide a clearer regulatory framework for banks, broker-dealers, and asset management institutions to participate in digital-asset trading and product development, and is widely seen as the most systematic attempt at crypto legislation in recent years.

The bill’s failure to pass further prolongs a regulatory vacuum in the crypto market, leaving the industry with greater uncertainty in areas such as compliance pathways, capital allocation, and institutionalization timelines.

The failure of this vote may mean the crypto industry will have to wait until next year for clearer rules.

The U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) are already moving forward with rulemaking in the digital-asset space. Even if Congress does not pass a clarity bill, those rules will still provide guidance for investment institutions.

The fundamentals of the crypto industry are stronger than ever. Billions of dollars of capital are moving on-chain; leading payment companies and financial institutions are adopting blockchain technology; and entrepreneurs around the world continue to develop new financial products—driving capital into the internet era. We will continue to work toward establishing clear regulatory rules that both protect consumers and provide room for innovation and building for entrepreneurs.

😁 It’s a wise move to invest regularly in BTC, ETH, BNB, and SOL!
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@Aria Daisy Alia_Daisy

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