Tech Gains After Initial Ho-Hum Rate Cut Reaction

September 18, 2025 Joe Mazzola
After the Fed's long-expected quarter-point rate cut failed to ignite a rally, tech shares came to the rescue this morning as Nvidia announced a collaboration with Intel.

Published as of: September 18, 2025, 9:13 a.m. ET

Listen to this article

Listen here or subscribe for free to the Schwab Market Update in your favorite podcast app.

The markets Last price Change % change
S&P 500® index

6,600.35

-6.41

-0.10%

Dow Jones Industrial Average®

46,018.32

+260.42

+0.57%

Nasdaq Composite®

22,261.33

-72.63

-0.33%

10-year Treasury yield

4.09%

+0.01

--
U.S. Dollar Index

97.15

+0.28

+0.29%

Cboe Volatility Index® 14.89
-0.83

-5.28%

WTI Crude Oil

$64.28

+$0.23

+0.36%

Bitcoin

$117,460

+$1,635

+1.41%

(Thursday market open) Tech shares took charge this morning after markets initially wobbled on the Federal Reserve's first rate cut since December. The quarter point cut and projections of two more this year came as expected, but there was also focus on the Fed's relatively conservative long-term outlook that projects fewer rate cuts next year than investors anticipate.

"As expected, the Fed cut its short-term interest rate, citing concerns about slowing job growth," said Kathy Jones, chief fixed income strategist at Schwab. "Where Fed policy goes from here is less clear. With a wide dispersion of projections about the path of interest rates among the members, it's hard to have confidence that the path of interest rates will follow the median projections."

The median projection for 2026 only implies one additional cut next year to a range of 3.25% to 3.5%, well above the sub-3% rate that the fed funds futures market currently implies. The rate change surprised few and left Wall Street unimpressed, judging by the lackluster initial response to what many viewed as conservative comments by Fed Chairman Jerome Powell. Powell said there was little support for a 50-basis point cut and called the Fed's move, "risk management." Major indexes swung back and forth Wednesday before closing nearly unchanged for the S&P 500 index, though the small cap Russell 2000® Index (RUT) held onto gains. Consumer discretionary and bank stocks performed well after the rate cut, and Nvidia (NVDA) led a burgeoning tech rally today on news of its collaboration with Intel (INTC).

To get the Schwab Market Update in your inbox every morning, subscribe on Schwab.com.

Three things to watch

  1. International demand for U.S. assets in focus: This afternoon's Treasury International Capital report, due around the close of trading, shows the inflows and outflows of capital from abroad. This report went under the radar for years but returned to the spotlight recently as the Trump administration's tariffs angered many countries. Now the Fed has begun lowering rates, another possible headwind. Official purchases of U.S. Treasury bonds from central banks and sovereign-type institutions have been falling, but foreign household investments in U.S. assets have been increasing. "We'll see if that dynamic continues or if the prospect of lower interest rates in the U.S. has discouraged that," Jones said. "We've also seen a lot of foreign households buying U.S. equities. That's been a support to the market. So, it'll be interesting to follow those numbers. They tend to lag a little bit, so they're not great for timeliness, but it's very interesting to see where the flows are going."
     
  2. Jobless claims retreat: With the Fed super focused on unemployment, this week's initial jobless claims of 231,000 could come as a relief. It was down from 264,000 a week earlier, but that may have been affected by a spike in claims from Texas where the deadline for unemployment assistance recently got extended after deadly flooding earlier this year. The new weekly claims figure is in line with short-term averages and continuing jobless claims of 1.92 million were also down but still near recent four-year highs. Though Powell indicated the Fed leans more toward the "full employment" aspect of its dual mandate, he also observed that tariffs have pushed up the price of some goods. He said he still thinks tariffs will have a one-time effect on prices, but added, "we can't assume that." After the meeting, Schwab's Jones said, "Our interpretation is that the Fed believes its rate cuts will help promote economic growth and employment, while delaying a decline in inflation."
     
  3. Concentration risk seen in stocks: The top few names in the S&P 500 by market capitalization account for an historically high share of total market capitalization and index returns, meaning investors face a risk that market breadth could become narrower and performance overly dependent on a few dominant stocks. "This dynamic can distort perceptions of market health, as index gains may mask underlying weakness among the majority of constituents," said Kevin Gordon, senior investment strategist at Schwab. "For individual investors, the risk is that portfolios tied closely to cap-weighted indexes become more vulnerable to company-specific or sector-specific shocks, reducing the benefits of diversification that broad equity exposure is meant to provide." Still, one could argue that to some extent, the market's concentration is justified. For instance, the Magnificent Seven's share of the S&P 500 is nearly 34%, but its earnings weight is right near all-time highs. That's a notable distinction from 2021, when the market was heavily dependent on a few names at the top even as earnings momentum started to weaken for those companies.

On the move

  • Intel (INTC) soared 28% ahead of the open on news that Nvidia will invest $5 billion in Intel stock at $23.28 per share and the two companies announced a collaboration to jointly develop multiple generations of custom data center and PC products. The focus will be on connecting Nvidia and Intel architectures.
     
  • Nvidia jumped 3% in early trading Thursday after falling around 3% yesterday as China requested that companies not buy chips from Nvidia. Shares of Nvidia competitor Broadcom (AVGO) also suffered sharp losses Wednesday. The rebound today for Nvidia came in part on the Intel news but also on reports that the issue of Nvidia's chips to China could be a discussion point in talks between China and U.S. leaders.
     
  • Other big tech stocks followed Nvidia, Intel, and Broadcom higher this morning, with advancing names including Palantir (PLTR), AppLovin (APP), and Marvell (MRVL). But shares of Nvidia competitor Advanced Micro Devices (AMD) slipped more than 4%, apparently hurt by the Nvidia-Intel collaboration that might pose a competitive threat.
     
  • Darden Restaurants (DRI) dropped 6% ahead of the open. Earnings per share came in shy of Wall Street's expectations, while revenue met consensus. Sales at restaurants open at least a year rose 4.7%, and Darden raised its revenue growth forecast for fiscal 2026.
     
  • Cracker Barrel (CBRL) fell nearly 7% in pre-market trading. The company missed analysts' earnings expectations but exceeded estimates for revenue in its latest quarter. It also expects a 4% to 7% decline in traffic at stores open a year or more. This came after controversy surrounding the company's proposed logo change.
     
  • Novo Nordisk (NVO) climbed 7.6% ahead of the open after saying late-stage trial results for its once-daily obesity pill showed “significant” weight reduction and tolerability in line with its blockbuster Wegovy injection.
     
  • CrowdStrike Holdings (CRWD) jumped nearly 5% in early trading as investors scooped up shares after the company's investor meeting. Several Wall Street firms raised their price targets on the stock, helped by what they saw as positive 2027 guidance.
     
  • Nike (NKE) climbed 1.8% ahead of the open following an upgrade to Outperform from Sector Perform from RBC Capital. The firm sees a "steeper revenue recovery" for Nike than many other analysts.
     
  • Nucor (NUE) fell 3.75% after the steel company cut guidance, Barron's reported. The company expects earnings to fall across all three of its operating segments from the second quarter of 2025.
     
  • Markets may be wobbly today and tomorrow with quarterly "triple witching" in the options markets occurring Friday. The Cboe Volatility index (VIX) fell slightly Wednesday and remains below 15. Any move upward would likely indicate uncertainty building ahead of triple witching.

More insights from Schwab

Fed analyzed: What's unclear after the Fed's rate decision and projections is the long-term path, wrote my colleague Kathy Jones in Schwab's analysis of the Fed meeting. "It's hard to draw a clear signal from this Fed meeting," Jones wrote. "What we do know is that the Fed is concerned about weakness in the labor market and will be watching those figures closely."

Fed analyzed: What's unclear after the Fed's rate decision and projections is the long-term path, wrote my colleague Kathy Jones in Schwab's analysis of the Fed meeting. "It's hard to draw a clear signal from this Fed meeting," Jones wrote. "What we do know is that the Fed is concerned about weakness in the labor market and will be watching those figures closely."

" role="dialog" aria-label="

Fed analyzed: What's unclear after the Fed's rate decision and projections is the long-term path, wrote my colleague Kathy Jones in Schwab's analysis of the Fed meeting. "It's hard to draw a clear signal from this Fed meeting," Jones wrote. "What we do know is that the Fed is concerned about weakness in the labor market and will be watching those figures closely."

" id="body_disclosure--media_disclosure--125471" >

Fed analyzed: What's unclear after the Fed's rate decision and projections is the long-term path, wrote my colleague Kathy Jones in Schwab's analysis of the Fed meeting. "It's hard to draw a clear signal from this Fed meeting," Jones wrote. "What we do know is that the Fed is concerned about weakness in the labor market and will be watching those figures closely."

Playing the news with options: Want to take advantage of news-driven volatility? In Schwab's latest video, Jeremy Kuhlman, trading solution specialist at Schwab, walked through three options strategies for playing a Fed rate decision or other economic release with market-moving potential. 

Beginner's guide to crypto: Expertise in blockchains isn't required to start investing in cryptocurrencies. But it's wise to gain a basic understanding of the asset class, starting with Schwab's Beginner's Guide to Investing in Cryptocurrencies.
 

Chart of the day

The 10-year Treasury note yield has steadily added to its premium over the 2-year Treasury yield over the last year, rising to above 50 basis points recently from nearly even back in November.

Data source: Federal Reserve Economic Data (FRED), St. Louis Fed. Chart source: thinkorswim® platform.

Past performance is no guarantee of future results.
For illustrative purposes only.

During the past year, the premium of the 10-year U.S. Treasury yield to the 2-year U.S. Treasury yield (purple line) has steepened from nearly even last November to above 50 basis points now. A higher premium for the 10-year yield can be positive if it reflects ideas that the economy might grow, but it can be negative if it implies that investors fear inflation and debt, therefore demand higher coupon rates to hold longer-dated Treasuries. The expanding premium also reflects pressure on the short end of the curve from anticipated Fed rate cuts.

The week ahead

Check out the investors' calendar for a summary of the top economic events and earnings reports on tap this week.

September 19: Bank of Japan rate decision.
September 22: No major earnings or data expected. 
September 23: August existing home sales and expected earnings from Micron (MU) and AutoZone (AZO).
September 24: August new home sales and expected earnings from KB Home (KBH) and Worthington Steel (WS).
September 25: August durable orders, second quarter GDP—third estimate, and expected earnings from Accenture (ACN), CarMax (KMX), and Costco (COST).

This material is intended for general informational purposes only. This should not be considered an individualized recommendation or personalized investment advice. The investment strategies mentioned may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decisions. 

The Schwab Center for Financial Research is a division of Charles Schwab & Co., Inc.

Supporting documentation for any claims or statistical information is available upon request.

Past performance is no guarantee of future results.

For illustrative purpose(s) only.

Investing involves risk, including loss of principal, and for some products and strategies, loss of more than your initial investment.

Diversification and rebalancing strategies do not ensure a profit and do not protect against losses in declining markets.

Indexes are unmanaged, do not incur management fees, costs, and expenses and cannot be invested in directly. For more information on indexes, please see schwab.com/indexdefinitions

The policy analysis provided by the Charles Schwab & Co., Inc., does not constitute and should not be interpreted as an endorsement of any political party.

Fixed income securities are subject to increased loss of principal during periods of rising interest rates. Fixed-income investments are subject to various other risks including changes in credit quality, market valuations, liquidity, prepayments, early redemption, corporate events, tax ramifications, and other factors.

Digital currencies [such as bitcoin] are highly volatile and not backed by any central bank or government. Digital currencies lack many of the regulations and consumer protections that legal-tender currencies and regulated securities have. Due to the high level of risk, investors should view digital currencies as a purely speculative instrument.

Cryptocurrency-related products carry a substantial level of risk and are not suitable for all investors. Investments in cryptocurrencies are relatively new, highly speculative, and may be subject to extreme price volatility, illiquidity, and increased risk of loss, including your entire investment in the fund. Spot markets on which cryptocurrencies trade are relatively new and largely unregulated, and therefore, may be more exposed to fraud and security breaches than established, regulated exchanges for other financial assets or instruments. Some cryptocurrency-related products use futures contracts to attempt to duplicate the performance of an investment in cryptocurrency, which may result in unpredictable pricing, higher transaction costs, and performance that fails to track the price of the reference cryptocurrency as intended. Please read more about risks of trading cryptocurrency futures here.

All expressions of opinion are subject to change without notice in reaction to shifting market, economic or political conditions. Data contained herein from third party providers is obtained from what are considered reliable sources. However, its accuracy, completeness or reliability cannot be guaranteed.

The Industrials Select Sector Index is one of eleven Select Sector Indices, which seek to track major economic segments and are highly liquid benchmarks. Stock classifications are based on the Global Industry Classification Standard. Capping is applied to ensure diversification among companies within each index. It includes 78 constituent companies with a combined total market cap of approximately $4.77 trillion.

0925-0130