Fed Verdict Looms as Oil Holds Near $100 and Tech Slides

🔴 MACRO SNAPSHOT

• FOMC's two-day meeting concludes tomorrow with the rate decision due 2:00 PM ET. CME FedWatch now shows an 87% probability of a 25-bp hike to the target range, up sharply from earlier hold expectations 13.
• Fed funds sits at 3.50%-3.75% heading into the decision — a hike would be the first tightening move markets have priced this cycle.
• The Saudi East-West pipeline shutdown from drone strikes continues to disrupt supply, keeping the oil-price-spike thread live; per overnight coverage, a planned Iran-Gulf diplomatic meeting on the Hormuz situation was postponed following the attack.
• Per overnight coverage, August retail sales are due tomorrow morning, landing about five and a half hours ahead of the Fed decision.

🔄 SECTOR ROTATION

Winners: Communication Services (XLC) +2.19%, Health Care (XLV) +1.45%, Consumer Staples (XLP) +1.25%. Losers: Technology (XLK) -1.81%, Industrials (XLI) -1.42%, Utilities (XLU) -1.34%, Energy (XLE) -0.94%, Materials (XLB) -0.90%. Defensives and communication led while cyclicals and tech lagged — Energy's decline despite the ongoing Middle-East supply shock is notable, and Tech's underperformance tracks the AI-capex jitters flagged in the pool. The spread reads as pre-Fed de-risking rather than a rotation into a clear theme.

📈 BONDS

2-year at 4.63% (+0.07), 10-year at 4.96% (+0.01). The 10y-2y spread narrowed to 0.32pp (-0.01) as the front end sold off faster than the long end — consistent with markets pricing a hike tomorrow rather than a cut.

🛢️ COMMODITIES

Gold $4,288.14, -1.02%. Silver $63.13, -1.21%. Both metals pulled back even as the Middle East supply disruption persists, suggesting the dollar and rate-hike odds are the bigger near-term driver for precious metals right now.

💎 CRYPTO

Bitcoin $78,185.01, +1.80%. Ethereum $2,515.43, +1.59%. Both up modestly ahead of tomorrow's rate decision.

📊 EARNINGS MOVERS

Upcoming: FedEx (FDX) reports Sept 17, EPS estimate $4.21.

🎯 NOTABLE SIGNALS

• Rocket Lab completed its $1.944B ATM offering, fully funding the pending Iridium acquisition expected to close mid-2027 7.
• Tenable jumped 16.5% to $35.08 on strong Q2 results, with Tenable One now 50% of new business and 106% net dollar expansion 22.
• Onto Innovation fell 11.07% even as it carries a Strong Buy rank on 146.7% projected EPS growth for the coming quarter 48.
• Sandisk shares near $1,552 are drawing stock-split speculation, though a split would be cosmetic with no fundamental impact 24.

💡 MY TAKE

The setup into tomorrow's decision is defensive: staples and health care led, tech and industrials lagged, and the curve flattened as the front end priced in tightening. If the hike lands as expected, the read-through is that markets have already done most of the repricing — the bigger risk is a surprise on retail sales that lands hours before the decision. Energy's failure to catch a bid despite the pipeline outage is worth watching; if crude stays elevated and energy equities don't follow, the move may be more about macro positioning than fundamentals.

Sector	Lean	Rationale
Communication Services	🟢	XLC led all sectors at +2.19%, the clearest green print of the session
Health Care	🟢	XLV +1.45% with staples also firm, defensives outperforming into the Fed
Technology	🔴	XLK -1.81%, worst sector, amid AI-capex valuation jitters weighing on chip names
Energy	🟡	XLE -0.94% despite ongoing Saudi pipeline disruption — a disconnect worth tracking
Financials	🟡	XLF -0.38%, banks and brokers mixed ahead of a rate decision that cuts both ways

Bottom Line: This is a pre-Fed positioning session — defensives up, cyclicals and tech down, curve flattening — with the oil supply shock adding a second live variable. Tomorrow's rate call and retail sales print will likely do more to set direction than anything in today's tape. Signal over noise.

👁️ NAMES TO WATCH TODAY

TSEM (Tower Semiconductor) — showcasing silicon-photonic and SiGe AI-data-center solutions at ECOC 2026, underscoring continued AI infrastructure capex demand 6. TTMI (TTM Technologies) — ramping N+M production for AI-driven data-center demand, targeting roughly $600M in second-half revenue from the segment 99. APH (Amphenol) — AI data-center sales up sharply, supporting the broader capex-driven revenue growth narrative 102. SMR (NuScale Power) — nearing a non-binding deal for 6 GW of nuclear capacity with TVA and ENTRA1, tied to AI-driven power demand; watch for a binding PPA 23. CME (CME Group) — FedWatch data showing 87% odds of a 25-bp hike is the market's key pricing tool into tomorrow's decision 13. VLO (Valero Energy) — fuel-margin beneficiary as crude stays elevated on the Saudi pipeline shutdown; earnings estimates up 30.9% 14. GOOG (Alphabet) — Jitterbit's new conversational-AI tooling adds another data point on enterprise AI integration spend 5. AMZN (Amazon.com) — its Anthropic stake, near $190B currently, is a proxy for how markets value generative-AI infrastructure bets 5. MSFT (Microsoft) — continuing to expand AI integrations across its enterprise suite, a steady thread in the capex story 5. RKLB (Rocket Lab) — fully funded its Iridium acquisition via a completed $1.944B ATM, removing a financing overhang ahead of the mid-2027 close 7.