Stocks sit about 9% above fair value as the Fed hikes rates for the first time in years

Here's the short version: the market looks a little expensive right now. FPI pegs stocks at about 9% above what it thinks they're really worth — so you're paying roughly nine dollars for every eight-ish dollars of value. That's up from about 7% a week ago, a small step in the pricier direction. One thing to keep in mind: FPI is a slow, long-term read on value across 1,016 US and European companies, not a knee-jerk reaction to a single week's headlines.

So what actually stirred things up this week? The big one: the Federal Reserve raised interest rates by a quarter point, bringing its target range to 3.75%–4.00% — its first rate increase in three years. That flips the script investors had gotten used to. For much of the past few years, Wall Street's debate centered around rate cuts; now investors are debating the speed of a new tightening cycle. Under the surface it was a tug-of-war week. The 10-year Treasury yield climbed above 5% to hit its highest level since July 2007 earlier in the week, and crude oil finished the week relatively unchanged but remained above $100 per barrel — both of which make borrowing and everyday costs stickier. The result was a split market: the tech-heavy Nasdaq rose about 0.4%, while the Dow fell about 0.2% and ended the week down more than 1.5%. Tech carried the load even as an unexpected debate over whether the AI industry itself should slow down rattled chip stocks early, before semiconductor shares recovered from the sharp selloff. Overseas added to the noise, as the Bank of Japan raised rates to a 31-year high and hinted at more hikes ahead.

Heads up: FPI's sector-by-sector fair-value readings didn't come through in this week's data, so we can't tell you exactly how pricey each corner is right now. What we can see is where the crowd was piling in. Tech and chips did the heavy lifting — a broad tech rally pulled the market up, helped by softer oil and lower bond yields, and AMD and Intel jumped more than 6% and 7%. When money rushes into one corner like that, prices tend to run ahead of what a business is really worth, so it's the spot to be choosiest.

The cooler corners are where value tends to show up. Transports, small caps, industrials and consumer discretionary have all been sliding for about five straight weeks, with energy the week's laggard. A few names got knocked hard on their own news — carmakers like GM, Ford and Tesla fell after Volkswagen cut its profit outlook on an $11.5 billion hit, and Netflix dropped almost 5% after a Wells Fargo downgrade flagged softer viewership. None of that is a reason to buy — but beaten-down groups are exactly where bargains hide. Worth dropping a couple onto your FPI watchlist and setting a buy price, so the app tells you if one dips to a level you like.

The wildest swing came from Greenbrier (GBX), the railcar maker. Its business has cooled hard this year — revenue fell to about $577 million from roughly $843 million a year earlier, and net earnings dropped to about $19 million from $60 million — and railcar deliveries in North America are projected at their lowest level since 2010. FPI's read flipped from looking about 76% pricey to about 78% cheap versus fair value — a jaw-dropping about 154-point turn that now puts it deep in bargain territory. Going the other way, First Bancorp (FBNC) got a lot more expensive on FPI's math, swinging from roughly 75% below fair value to about 76% above (a jump of around 151 points). The news was quiet and steady — the board declared a $0.24 cash dividend payable October 23, and the stock has been grinding near its highs, trading between about $46 and $67 over the past year — so the value that was there earlier has largely closed up.

Two more caught our eye: Centrus Energy (LEU), the nuclear-fuel name, and Asbury Automotive (ABG), the car dealer group — both jumped nearly 100 points from cheap to pricey versus fair value this week. Zoom out from the drama and the hunting ground is growing: 52 stocks slipped into undervalued territory (more than 10% below fair value), even as 56 climbed back out. If names like Greenbrier are on your radar, that's the kind of move worth adding to a watchlist and setting a price you'd be comfortable paying in the FPI app.

Investors added 20 new buy prices this week, bringing us to 561 across 181 tickers. Big tech got most of the attention: Microsoft led with three new prices (now 55 investors watching it), while Google, Meta, and Netflix each picked up two, and Amazon added one. No new community buy zones unlocked this week.

On the price side, a few medians shifted. Palantir moved the most — the typical buy price among its 16 investors climbed about 4%, meaning folks are willing to pay a bit more before it looks like a deal to them. Microsoft's median nudged up about 2%, and Netflix barely budged. You'll find the actual price targets in the app; here we only share the moves and the counts.

Two things top the calendar. First, Fed officials are out talking — Chicago Fed President Austan Goolsbee kicks things off Monday with remarks that may offer clues on the Fed's economic outlook and where interest rates are headed. Why care? Rates shape what companies are worth, so any hint about the path matters. Second, it's a busy stretch for earnings. AutoZone, KB Home, General Mills, Paychex and Cintas all report inside 48 hours, covering car-repair budgets, new-home demand, grocery pricing and small-business payrolls in one stretch. That's a nice cross-section of how regular households are actually spending.

Why it matters for you: fresh results feed straight into FPI's models, which update daily — so a strong or weak report can nudge a stock's fair value the very next morning. The week of September 21 brings 24 confirmed earnings reports, with the heaviest action on Tuesday and Wednesday — Tuesday alone has AutoZone, THOR Industries and MillerKnoll before the open, plus KB Home and Worthington after the close. If you follow any of these names, keep an eye on your watchlist and consider setting a buy price in the app so you're ready if numbers move a fair value your way.