GS Equities Color US EQUITIES COLOR HIKE

GS Jeter - US EQUITIES COLOR HIKE 16 Sep 2026 Mitch Jeter · Goldman Sachs · Analyst, FICC & Equities Wed 16 Sep 2026, 4:45pm ET

S&P -45bps closing @ 7,551 w/ a MOC of $1.25B to SELL. NDX +3bps @ 28,945, R2K -40bps 2,858, and Dow -121bps @ 51,461. 18.486bn shares traded across all US equity exchanges vs ytd daily avg of 18.707.bn shares. VIX +297bps @ 17.71, WTI Crude -352bps @ $102.1, US 10YR +0.019bps @ 5.0205%, gold -63bps @ 4,265, dxy +69bps @ 100.30 and Bitcoin +53bps @ $76,283

Equities finished lower and continued this week’s losing streak after rallying to start before the FOMC this afternoon, where the Fed raised rates by 25 bps, as expected, to 3.75%-4.00%. Much more hawkish set of dots, with the plot showing one additional rate hike for 2026 and no cut next year. In terms of 26 distributions, only 2 participants showed just today's hike for year, 4 showed 3, and the rest had 2 for the year. Inflation projections higher than last time, suggesting the methodological changes coming up are not accounting for large downward revisions. Oil finished -3%, giving back much of yesterday’s gains, with positive headlines surrounding the East-West pipeline. However, energy dynamics remain a key focus with clarity surround a possible end to the Iran War still limited.

Elsewhere, Momentum flipped the script from yesterday: winners led today (vs losers underperforming yday) as the AI complex bifurcates on quality, with strength from Data Centers (GSTMTDAT +1.28%) and AI Semis (GSCBSMHX +89bps) while Software At Risk (GSTMTSOS -1.83%) and AI-Productivity (GSXUPROD -2.19%) moved lower, a clear split between profitable/duration AI and the speculative cohort.

Our desk was a 4/10 from an activity level perspective, finishing -104bps better for sale. Asset managers finished $829mm better for sale with supply in macro products, and tech vs. small demand in comm. services and consumer discretionary. Hedge Funds finished small net buyers with demand in tech, consumer discretionary, communication services, and consumer staples vs. supply in macro products and financials.

GS Rates Strategy On The Fed (TY Will Marshall):

The Fed hiked as expected, with no dissents. The statement indicated that "today's policy action will support a timelier return to the Committee's 2 percent goal" but refrained from providing guidance. Median dots showed 2 hikes (i.e. one beyond today's move), no change in the policy rate in 2027, and one cut in each of 2028 and 2029. Of note in the SEP was a 3.4% core PCE forecast for the end of this year, which on the surface would seem consistent with limited assumed impact from the PCE methodological changes.

All in all, while the outcome landed a hawkish versus our economists' baseline for what we'd get, the info so far seems pretty close to the mark versus what most were expecting in the median and skews a touch hawkish when accounting for the breadth of support for 2 hikes this year and the 8 projections for a 4.25- 4.5% rate in 2027. Certainly, short of the extent of distribution-opening hawkishness we heard from the

ECB last week (closer to an outcome that probably supports some moderation in vol, as Friedrich wrote in yesterday's Vol Monitor), but still enough of a vigilant/inflation focused signal to preserve the recent flattening of the curve.

DERIVS: Today's highly anticipated FOMC rates decision held vols relatively firm in the morning, with flows on the slower side as market participants sat on their hands in expectance of a guaranteed rate hike. Following a quiet VIX expiry in the morning, with 1m variance settling on the lower side at 16.79, there was little change in the vol surface pre-Fed. Into the afternoon announcement, we saw buyers of IWM end of month upside as well as buyers of GLD gamma in call spread format ranging from Sep to Jan tenors. This could be a two-part story, with Sep calls expressing a bet on gold upside into FOMC, and longer- dated Dec/Jan calls to play for a sustained breakout. Towards the end of the session, we saw little panic as we failed to realized the straddle to the downside - fixed strike vols actually relaxed across the surface and skew was bid. A large concentration of dealer long…