MPC Morning Call 17th September – Stocks drift lower as investors wait for Fed decision

Overnight – Stocks drift lower as investors wait for Fed decision

Stocks closed lower after hitting a fresh intraday record overnight as investors looked ahead to a widely expected Federal Reserve rate cut due tomorrow morning.

U.S. retail sales posted stronger-than-expected growth in August, rising 0.6% on the month and surpassing projections of a modest 0.2% gain. The uptick, supported by demand in e-commerce, followed a similarly revised increase in July and signaled resilience in consumer spending despite concerns about a softening labor market. While analysts viewed the data as a sign of healthy household demand, they noted the Federal Reserve’s main focus remains on jobs as it begins its two-day policy meeting, where markets broadly expect a 25 basis-point rate cut alongside updated economic projections.

Market sentiment was further buoyed by optimism over U.S.-China trade negotiations in Madrid. President Trump highlighted progress, emphasizing a breakthrough on the future of TikTok’s U.S. operations, which has been a key sticking point in talks. Treasury Secretary Scott Bessent confirmed that a framework agreement over TikTok’s U.S. ownership had been reached, with a call between Trump and President Xi scheduled to finalize terms. Hopes of a successful outcome in trade discussions strengthened risk appetite among investors already watching for the Fed’s policy update.

In corporate news, Ford announced plans to cut around 1,000 jobs at its Cologne EV facility due to weaker-than-expected demand, while Google unveiled a £5 billion investment into Britain ahead of Trump’s upcoming state visit. Company earnings and capital moves drove notable stock shifts: Dave & Buster’s shares tumbled on disappointing results, Rocket Lab declined after disclosing a $750 million stock purchase plan, and Oscar Health dropped following a $350 million note offering. By contrast, Oracle shares gained after reports linked its participation in a consortium that could keep TikTok active in the U.S. under the terms of a potential U.S.-China deal.