The market awaits new clues about the policy path! The minutes of the September meeting of the Federal Reserve are a key test of the week, and Pepsi and Delta Air Lines are the first to show earnings

The Zhitong Finance App learned that last week, the Dow Jones Industrial Average and the S&P 500 both recorded declines, falling 1.3% and 0.3% respectively; the Nasdaq Composite Index rose 0.5% and hit a record high in the intraday period last Friday.

Although artificial intelligence (AI) trading is supporting market performance at the index level, and lower-than-expected key inflation data and slightly dovish statements from some officials have drastically cooled market expectations that the Fed will continue to raise interest rates this month, at the same time, US bond yields continued to rise — last week, the yield on 30-year US bonds reached 5.69%, and the 10-year US bond yield surpassed 5.3%, both of which reached this level for the first time since 2002 — and the high oil price remains a major challenge for investors.

In the coming week, the Federal Reserve's policy path will remain the core focus of market transactions. The minutes of the September meeting of the Federal Open Market Committee (FOMC) released on Wednesday will provide investors with more clues to determine whether the Federal Reserve will continue to raise interest rates in October.

At the September 16 meeting, all FOMC members voted unanimously to raise interest rates by 25 basis points to raise the federal funds rate target range to 3.75%-4.00%. According to the latest economic forecast, the FOMC member's median forecast for the federal funds rate at the end of 2026 is 4.1%, which is slightly higher than the median value of the current policy range. This means that according to the updated forecast framework, there is still room for further interest rate hikes this year.

In terms of macro data, the US ISM service index for September, the August trade balance, consumer credit, the number of initial jobless claims, and the preliminary value of the University of Michigan Consumer Confidence Index for October, which will be released this week, will all provide the latest basis for judging the state of the US economy.

On the corporate side, the third quarter earnings season is coming soon. Although the latest earnings season has yet to fully kick off this week, several leading companies in the consumer and aviation industry will be the first to announce results. Constellation Brands (STZ.US), LEVI.US (LEVI.US), Pepsi (PEP.US), and Delta Air Lines (DAL.US) will release financial reports one after another, providing a new window for observing US alcohol consumption, clothing, food and drink, and air travel needs, respectively. Earnings season in the true sense of the word will begin next week. At that time, large banks such as J.P. Morgan Chase (JPM.US) and Bank of America (BAC.US) will announce their results. This is generally seen as a sign of the official start of a new earnings season.

According to a FactSet analysis at the end of September, as the third quarter progressed, analysts' views on performance became more and more optimistic, and earnings per share expectations for S&P 500 companies were raised by 1.3%. Analysts, on the other hand, usually lower profit expectations as the quarter progresses.

According to FactSet data, analysts expect the third-quarter revenue of S&P 500 companies to increase 12.1% year-on-year and profit to increase 29.1% year-on-year. FactSet said that if these expectations are finally fulfilled, the profit growth rate of S&P 500 companies will exceed 25% for three consecutive quarters.

Wolfe Research said that higher expectations indicate that corporate profits may “continue to maintain momentum.” The agency's analyst wrote last week: “Despite a strong rise in profit expectations for one consecutive quarter, which means that companies that announce results in the next few weeks are facing a higher threshold, we still believe that AI infrastructure construction is still strong, and against the backdrop of fluctuations in the macroeconomic environment, this earnings season is likely to be a positive catalyst for the rise in the stock market.”

The minutes of the Federal Reserve's September meeting will be released soon

The Federal Reserve will release the minutes of the September 15-16 FOMC meeting on Wednesday EST. This will be the most important macroeconomic event of the week ahead. At the September meeting, the Federal Reserve decided to raise interest rates by 25 basis points and stated in a policy statement that US economic activity continues to expand at a steady pace, domestic spending remains resilient, capital investment is strong, and employment growth is generally in line with labor supply, yet inflation is still high.

Compared to policy statements, the minutes will provide more details about internal discussions. The market will focus on three key issues: how officials assess the continuing impact of rising energy prices and other rising costs on inflation; whether more committee members believe that current interest rates are still insufficient to contain price pressure; and what economic data is needed to trigger another rate hike.

According to the September economic forecast, the FOMC member's median PCE inflation rate forecast for the end of 2026 is 3.7%, core PCE is 3.4%, and the median federal funds rate forecast is 4.1%. Therefore, if the minutes of the meeting show that most officials still regard inflation as the primary risk, the market may continue to bet that the Fed will raise interest rates again in October or December; conversely, if official concerns about employment and economic growth increase markedly, then market expectations for subsequent interest rate hikes may be limited.

The US ISM Service Industry Index for September is about to be released: prices and employment segments are worth paying attention to

On Monday, the American Institute for Supply Management (ISM) will announce the ISM service sector PMI for September. According to the data, the ISM service sector PMI for August was 55.4, up from 54.1 in July, and has been in the expansion range of more than 50 for the 26th consecutive month. Among them, the business activity index rose to 61.7, and the new orders index rose to 60.9, indicating that demand in the service sector is still strong.

However, the two sub-indicators in the report deserve special attention. The service sector employment index in August was only 47.8, in a contraction range for the second month in a row; at the same time, the payment price index rose to 72.6, the highest level since August 2022.

This shows that the US service sector is currently showing a combination of “strong demand, weak employment, and high price pressure.” Therefore, if the September data continues to show that the price index is above 70 and the employment segment improves again, it may reinforce the view that the economy is still resilient and inflationary pressure continues, thereby supporting the market's expectations for further interest rate hikes by the Federal Reserve.

Pepsi's earnings report will test US food and beverage consumption, and the North American business performance will be the key

Before the US stock market opens on Thursday, Pepsi will announce its results for the third quarter of the 2026 fiscal year. In the second quarter, the company achieved net revenue of US$24.181 billion, up 6.4% year on year; organic revenue increased 2.4%, and core earnings per share increased 4% year over year. The company also maintained its full-year results guidance for FY2026.

In the third quarter, the market will pay close attention to sales trends, pricing capabilities, and profit margins of Pepsi's North American food and beverage business. Although the company's previous international business performance was relatively strong, North American consumers are more sensitive to food and drink prices, so whether US sales can improve will be the focus of this financial report.

Additionally, investors will also look to see if previous related initiatives — such as product portfolio adjustments, sugar-free beverages, functional foods, and cost reduction measures — will drive business growth in North America. Further growth in sales and organic revenue will indicate that American consumers are adapting to food and drink price adjustments.

Delta's earnings report is in the spotlight: aviation demand and high fuel prices are in the spotlight

On Friday, Delta will announce third-quarter results for the 2026 fiscal year. The company's second-quarter results exceeded previous guidance, and the third-quarter revenue is expected to increase by more than ten percentage points year-on-year, while reaffirming its annual adjusted earnings per share of 6.50 to 7.50 US dollars and free cash flow targets of 3 billion to 4 billion US dollars. In this financial report, the market will pay close attention to domestic and international flight demand, corporate and high-end passenger revenue, ticket prices, and unit costs.

Meanwhile, as global oil prices have remained high recently, aviation fuel costs have once again become a key variable. Investors will focus on whether higher oil prices will significantly erode profit margins in the third quarter, and whether the company can mitigate the impact of fuel price fluctuations through ticket pricing, capacity adjustments, and refining operations.

If travel demand remains strong and the company maintains a year-round profit guide, it will indicate that American consumer spending on services remains resilient. However, if fuel costs rise rapidly or ticket demand begins to weaken, the airline industry's profit expectations may face a readjustment.