Weekly Market Insights - Week of September 14th

Major Indices Outlook for the Week Ahead

Welcome back to the Hobbs Trades weekly newsletter! As your go-to market analyst here at www.hobbstrades.com, I'm providing a comprehensive overview of the major indices—S&P 500, Nasdaq 100, Dow Jones, and Russell 2000—as we enter the trading week starting September 15, 2025. Last week's softer-than-expected inflation data fueled rate cut optimism, pushing indices to fresh highs, though small caps lagged slightly. With the FOMC meeting mid-week, expect heightened volatility as markets price in a potential 25bps cut. Broader trends remain bullish, but watch for rotations and policy signals. Let's break it down.

Recent Performance Recap

Major indices closed the week on a strong note amid cooling inflation and resilient economic signals. The S&P 500 ended at 6,584.29, up 1.59% for the week, hitting a new all-time high with broad sector participation. The Nasdaq 100 surged to 24,092.19, gaining 1.86%, led by AI and semiconductor strength, with a year-to-date advance of over 20%. The Dow Jones rose 0.90% to around 45,711, supported by cyclicals but trailing tech-heavy peers. The Russell 2000 dipped 1.01% to 2,397.06, underperforming amid rotation concerns but holding a 7% YTD gain on valuation appeal.

August's gains carried into September, with the S&P 500 up 1.91% last month, though September's historical seasonality suggests caution. Valuations are elevated—S&P at 22-23x forward earnings, Nasdaq at 27x—but rate cut hopes and projected 7-10% earnings growth for 2025 support upside. Recent X chatter highlights bullish momentum on Fed easing, with traders eyeing Nasdaq targets above 24,000 and small-cap breakouts, though some warn of pullbacks if cuts disappoint.

Key Price Levels for Futures

Futures are poised near highs, with the FOMC as a pivotal catalyst. Here's what to watch for each index:

• S&P 500 (ES Futures): Trading around 6,489, the S&P could find support near 6,444 (recent low), with further cushions at 6,399–6,447 and a deeper 6,314 if selling intensifies. Resistance lies at 6,508–6,532 (recent highs), with a push toward 6,584 or 6,648 possible on dovish Fed signals.

• Nasdaq 100 (NQ Futures): Hovering near 23,496, support is at 23,505, with 23,461–23,506 and 23,000 as deeper levels. Resistance at 23,856 and 23,902 could give way to 24,000–24,100 if tech momentum continues.

• Dow Jones (YM Futures): Around 45,459, support sits at 45,211, with 45,000–45,200 and 44,000 as fallback zones. Resistance at 45,770 and 46,000 could lead to a 46,227 high on cyclical strength.

• Russell 2000 (RTY Futures): Near 2,397, support is at 2,368, with 2,350–2,370 and 2,300 below. Resistance at 2,416 and 2,436 could open a path to 2,525 if small caps rally.

Breakouts above resistances could accelerate gains on a dovish Fed; breaches below supports may trigger risk-off moves.

ETF Options Chain Insights

Options activity shows cautious optimism, with elevated volume on near-term expirations (September 20, 2025) reflecting hedging around the Fed. Implied volatility remains subdued (9-13% ATM), but put skew hints at downside protection. Key high open interest strikes:

• SPY (S&P 500): Closed ~658.43. Calls at 650 (6,207 OI, vol 39,539, IV 5.13%) show upside bets; puts at 550 (5,367 OI, vol 195, IV 50%) indicate hedging. Volume spikes suggest mild bullishness.

• QQQ (Nasdaq 100): Closed ~590.92. Calls at 575 (1,841 OI, vol 47,806, IV 9.86%) reflect tech optimism; puts at 575 (6,086 OI, vol 37,154, IV 11.87%) show elevated hedging amid high valuations.

• DIA (Dow Jones): Closed ~457.11. Calls at 464 (3,653 OI, vol 170, IV 9.23%) suggest cyclical upside; puts at 450 (858 OI, vol 450, IV 11.63%) point to balanced caution.

• IWM (Russell 2000): Closed ~239.71. Calls at 236 (1,576 OI, vol 4,777, IV 14.04%) show mild bullishness; puts at 231 (2,910 OI, vol 3,186, IV 16.80%) reflect rate sensitivity.

Call volume slightly outpaces puts, but higher IV on OTM puts signals hedging—positioning for contained post-Fed moves.

Economic Events to Watch This Week

The FOMC dominates, with a 25bps cut nearly fully priced (~85% odds). Labor and consumer data add context. Key highlights:

• Monday, September 15: Retail Sales (8:30 ET), Empire Manufacturing (8:30 ET). Consumer strength in focus.

• Tuesday, September 16: Industrial Production (9:15 ET), Capacity Utilization (9:15 ET).

• Wednesday, September 17: Housing Starts (8:30 ET), Building Permits (8:30 ET); FOMC Rate Decision (2:00 ET), Powell Presser (2:30 ET). The big one—dot plot and rhetoric will drive sentiment.

• Thursday, September 18: Jobless Claims (8:30 ET), Philadelphia Fed Manufacturing (8:30 ET).

• Friday, September 19: Leading Indicators (10:00 ET).

Global events include BOJ and ECB meetings, but U.S. policy takes precedence. Softer data could amplify cut expectations.

Outlook for the Week

Fed easing remains a key driver, with the S&P 500 and Nasdaq 100 positioned for 8-15% year-end gains if cuts materialize and earnings hold (7% EPS growth forecast). The Dow could see 9-10% upside on cyclical strength, while the Russell 2000, at a 21% valuation discount, offers potential to 2,500+ on rotation. Bullish above key supports with dovish FOMC catalysts; bearish on hawkish surprises testing deeper levels. Options suggest hedged bets—volatility may spike mid-week.