Stock Markets Need a Boost. Why the Fed, AI, Crypto Could Drag Them Down.

(Spencer Platt/Getty Images)

The stock market is meandering along and in need of some clear direction. But when it comes, investors may not like it.

The S&P 500 fell for a second consecutive day Wednesday. Three-day, or more, losing streaks, have been a rarity in recent months, happening just four times since the early April slump following President Donald Trump’s sweeping tariffs announcement. It has had 10 such winning streaks over the same period on its way to record highs.

But the Federal Reserve’s internal debate over the path of interest rates continues to preoccupy, and worry, markets. Fed Chair Jerome Powell warned of the “two-sided risks,” —the upside threat to inflation and the downside risk to the labor market—in a speech Tuesday.

The central bank’s officials have since gone to bat for one of those sides. Chicago Fed President Austen Goolsbee warned against a rapid series of cuts Wednesday, citing a “mostly steady” labor market and inflation “heading the wrong way.” That follows inflation concerns raised by the Atlanta Fed’s Raphael Bostic.

On the other side, Fed governors Michelle Bowman and Stephen Miran have called for lower rates. With the market betting on two more cuts this year, a divided central bank is likely to cause some concern.

It isn’t the only sign of trouble. A raft of tech positivity Wednesday wasn’t enough to lift the Nasdaq Composite . Alibaba’s AI spending hike and partnership with Nvidia, Micron’s strong earnings, and a report that Intel has approached Apple for investment couldn’t buoy the tech-heavy index. Cryptocurrencies are also continuing to decline, another indication of weakening risk appetite.

Economic data in the coming days, including the Fed’s preferred inflation metric, could jolt the market in one direction or the other. A potential TikTok deal between the U.S. and China could be a positive catalyst, but only if it’s seen as a prelude to a broader trade agreement between the world’s two largest economies.

The market may be drifting along, but there could be choppy waters ahead.

— Callum Keown

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Washington Blame Game Escalates As Government Shutdown Looms

Lawmakers aren’t officially around Capitol Hill this week, but Democrats and Republicans spent Wednesday swapping insults and barbs, blaming each other for the looming federal funding impasse. They’ll have two days to get a bill to President Donald Trump’s desk for signature or a federal shutdown happens.

• Top Democrats say that with just days until government funding lapses, Trump and the Republicans were marching the country toward a shutdown. Democrats want an extension to subsidies for Affordable Care Act health plans attached to the bill, but Republicans want a “clean” bill with no attachments.
• House Democratic Caucus Chair Rep. Pete Aguilar (D., Calif.) warned that premiums will skyrocket next year if funding isn’t restored. House Democratic Leader Rep. Hakeem Jeffries told reporters that Democrats are “a hard ‘No’” on what Republicans have presented.
• The House passed a bill that would extend government funding into November with no Democrats supporting it before it recessed last week. But the Senate shot that bill down. Republicans will have to bring the bill back up for a vote when they return Monday.
• Amid the fighting, the White House held a dinner with cabinet officials and staff Wednesday evening. Not many details were forthcoming about attendees, though Barron’s confirmed National Intelligence Director Tulsi Gabbard and Labor Secretary Lori Chavez-DeRemer were expected. Treasury Secretary Scott Bessent was in New York.

What’s Next: Lawmakers have until the end of Tuesday to get a temporary funding measure through or the shutdown kicks in on Wednesday Oct. 1 at midnight.

— Janet H. Cho

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August New-Home Sales Surged In Hopeful Sign For Builders

A surge in new-home sales in August was the fastest rate of sales in more than three years and an early sign that buyers might be coming back to the market, lured by incentives offered by home builders to get things moving again.

• Sales surged in August to a seasonally adjusted annual rate of 800,000 from 664,000 in July, the fastest since January 2022. Peter Boockvar, the chief investment officer at One Point BFG Wealth Partners, said incentives were the main catalyst, and there are few signs that incentives are leveling out.
• A National Association of Home Builders survey found builder confidence remained depressed in September, with 39% of respondents reducing prices and 65% offering sales incentives. Unlike existing-home sales which measure closings, new-home sales data tracks contract signings or deposit payments, meaning sales could still fall through.
• Nancy Vanden Houten, Oxford Economics’ lead economist, said August’s new-home sales reading “is at odds with other indicators and likely overstates any improvement in housing activity.” Nevertheless, she expects home sales to improve as mortgage rates decline and the labor market regains its footing.
• Mortgage rates measured by Mortgage News Daily have recently been around 6.35%—still higher than the under-6% rates economists say are needed for a housing market pickup, but lower than the roughly 7% rate at which they began 2025.

What’s Next: Anywhere Real Estate, owner of Century 21, Coldwell Banker, and Corcoran real estate brands, is merging with Compass in a $4 billion deal. But it offered to buy Douglas Elliman earlier this year and was rejected, Reuters reported. With Anywhere out of the picture, Douglas Elliman could become a takeover target.

— Shaina Mishkin, Andrew Bary, and Janet H. Cho

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Alibaba Shows China’s AI Boom Could Outlast the U.S.’s

Alibaba is doubling down on its push into artificial intelligence. It’s the latest reminder that the AI boom could play out differently —and last longer—in China than in the U.S.

• CEO Eddie Wu said Wednesday that the company would expand its investment in AI and cloud infrastructure over three years beyond the 380 billion yuan ($53 billion) it outlined in February. The company also released its latest large-language model, Qwen3-Max.
• Alibaba stock got a boost from the announcements. The company’s American depositary receipts—essentially the stock listed in New York— advanced 8.2% in Wednesday trading.
• One big takeaway for investors is that the Chinese government’s stance toward Alibaba appears to have shifted. While the company’s market value has cratered in recent years due to an antimonopoly government crackdown, analysts say the AI investment plans were likely made with Beijing’s blessing.
• China has set a goal of becoming an “intelligent economy” and “intelligent society” by 2035. That necessitates the adoption of AI into every aspect of its economy and could translate to an AI boom that has more legs than that in the U.S., said Laila Khawaja, head of technology research at Gavekal.

What’s Next: China’s AI ambitions could be curtailed in the near term because of its limited access to advanced AI chips, as trade negotiations with the U.S. drag on. But Beijing is increasingly encouraging Chinese companies to use domestic chips as Washington restricts the country’s access to advanced American technology.

— Reshma Kapadia and Jack Denton

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Trump Expected to Sign Executive Order on TikTok Split

Today, President Trump is expected to sign an executive order that will be another step toward splitting the Chinese viral video app TikTok into U.S. and international versions. The order will provide the legal justification for the split, saying it meets the U.S.’ national security needs.

• A deal seems to be getting closer after Trump extended the deadline several times. A 2024 law requires TikTok’s owner ByteDance to divest the app in the U.S. or face a ban in app stores. The EO will also say it constitutes a qualified divestiture.
• A senior White House official told reporters this week to expect a signed framework agreement between ByteDance and “managing investors” on the U.S. side sometime soon, but it is unclear whether that will also happen today.
• The White House said that the U.S. TikTok will be owned by a joint venture in which ByteDance will have less than 20% ownership. The shares will be majority U.S.-owned, and likewise the board will have an American majority.
• Importantly, the new U.S. TikTok will get access to ByteDance’s recommendation engine that picks the next video for users to watch, though details aren’t clear. Oracle and Silver Lake are expected to invest and Oracle will continue to provide U.S. cloud services.

What’s Next: According to new data from Sensor Tower, TikTok had 66 million daily average U.S. users in the third quarter, putting it in fourth place among social media apps behind Google’s YouTube and Meta’s Facebook and Instagram.

— Adam Levine

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Waymo Unveils Corporate Self-Driving Taxis As Technology Expands

Self-driving technology company Waymo is rolling out a self-driving taxi platform for companies to help ferry around their workforces, evidence the robo-taxi trend is expanding. The concept builds a recurring business travel operation for Waymo and gives employers control over where and how taxis are used.

• Waymo already operates self-driving taxis in several markets including San Francisco, Los Angeles, and Phoenix. It said one in six riders in those markets use Waymo to commute to work or school, so it’s taking the model to companies to offer their workers. Online used car dealer Carvana is using it.
• Waymo, which is owned by Alphabet, now completes more than one million fully autonomous cab rides a month, operating in San Francisco, Phoenix, Los Angeles, Austin, and Atlanta through Uber Technologies. It will add Miami next year and is testing in New York and Las Vegas, and has a Nashville deal with Lyft.
• Service expansions and new products for businesses are another example of how autonomous driving technology is expanding, relatively rapidly, in the U.S. Tesla has a self-driving robo-taxi operation in Austin, Texas. Amazon’s Zoox operates free taxis in Las Vegas.
• Tesla CEO Elon Musk hopes to have its robo-taxis cover half the U.S. population by the end of the year, a feat that would require technology improvements and regulatory approval. He’s also hoping shareholders approve a potential $1 trillion pay package for him.

What’s Next: Musk explained in a post on X that it isn’t about compensation, it’s about him having enough influence at Tesla and not being elbowed out in the future by an activist with no interest in the company. Shareholders meet Nov. 6.

— Al Root and Callum Keown

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—Newsletter edited by Liz Moyer, Patrick O’Donnell, Rupert Steiner