Review & Preview: Delayed Reaction

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Good Medicine. So much for those rate-hike worries. A day after the Federal Reserve’s first interest-rate increase in three years, stocks ended the day sharply higher.

The rally reflected a reassessment from Wall Street, which had been fairly unmoved in the initial hours following the Fed’s move.

Having slept on the hike, Wall Street apparently felt better this morning. Maybe it was a rereading of what Fed Chair Kevin Warsh meant yesterday when he said the Fed had “removed a dose of accommodation.” He used the phrase four times during his press conference.

Dose is a word that conjures limited treatment followed by health. Traders still see a series of rate hikes to come, nearly three more quarter-point moves over the next 12 months. But Warsh sounded plenty confident about the economy yesterday. And he seems to have convinced investors that the Fed is working from a position of strength.

Today’s rally counters the traditional narrative that rate hikes are bad for stocks, particularly higher-growth tech stocks. The S&P 500 rose 1.1% on the day, powered by the tech sector, which rose 2.2%.

“If the U.S. economy stays as resilient as it currently seems, rate hikes will not change that,” Nicholas Colas, co-founder of DataTrek Research, wrote this morning.

Meanwhile, higher rates could whip inflation. It might not stay this way, but for now**,** Wall Street is viewing rate hikes as a win-win.

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Company

Last

Chg

Chg%

Dow Jones Industrial Average

51,778.04

316.14

0.61%

S&P 500 Index

7,637.76

85.95

1.14%

NASDAQ Composite Index

26,418.30

439.87

1.69%

Market Data as of

The Hot Stock: Generac +18.3%
The Biggest Loser: T-Mobile -5.6%

Best Sector: Technology +2.2%
Worst Sector: Financials -0.1%

Created with Highcharts 9.0.1Thursday, Sept. 17Index performanceSource: FactSetAs of Sept. 17, 3:55 p.m. ET

Created with Highcharts 9.0.1Sept. 1700.250.500.751.001.251.501.752.00%Nasdaq CompositeS&P 500Dow industrials

AI’s Tipping Point

The worries about artificial intelligence have dominated headlines for the several weeks. And it’s about to get louder. Any day now, Anthropic is expected to release the paperwork for its highly anticipated initial public offering.

For now, that prospectus has been filed confidentially with the Securities Exchange Commission. But if Anthropic hopes to go public sometime in October, as many believe, the paperwork will have to be released to the public very soon.

And it’s going to be a major event. Anthropic’s S-1, as IPO filings are called, will be hundreds of pages of financials and mission statements next to—most likely—dire warnings about the company’s own AI products.

That strange contrast is the subject of Barron’s latest cover story by Nate Wolf, which went live this morning.

Nate frames the IPO as a make-or-break moment, not just for Anthropic, but for how investors think about AI, and its push and pull between profits and humanity. Nate writes:

Anthropic has already taken actions that may not sit well with public shareholders. In his January essay, Amodei reported that the company put algorithmic safeguards in place that can raise computing costs by almost 5% for some models and cut into profit margins. Anthropic also surrendered a Department of Defense contract reportedly worth up to $200 million earlier this year, when Amodei refused the Pentagon’s demands to drop restrictions on using Claude in scenarios involving lethal force or surveillance.

Get ready for Anthropic’s IPO and the next big AI debate by reading Nate’s story here.

The Calendar

The Bank of Japan announces its monetary-policy decision tomorrow. The central bank is widely expected to lift its key short-term interest rate to 1.25% from 1%. Treasury Secretary Scott Bessent has voiced support for higher interest rates in Japan to support a weak yen. The yen hit a four-decade low against the dollar earlier this summer but has rebounded a bit with the help of U.S. intervention. A stronger yen could keep a lid on rising Treasury yields.

What We’re Reading Today

***Barron’s Live returns on Monday.*Barron’s Live features timely and actionable insights for investors. We give you behind-the-scenes conversations with the newsroom, connecting you with our editors and reporters covering the markets, the economy, and more.

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