The Federal Reserve is widely expected to cut interest rates by a quarter percentage point on Wednesday. Investors will be closely watching for clues about future rate decisions in the Summary of Economic Projections and Fed Chair Jerome Powell's press conference. Although a rate cut is anticipated, hawkish commentary could lead to a stock market selloff.
, which is due out on Wednesday afternoon. Fed funds futures trading currently shows a 95% chance that the central bank will cut interest rates by a quarter percentage point, according to the
Investors will also be paying close attention to Fed policymakers' Summary of Economic Projections and Fed Chair Jerome Powell's press conference, seeking clues about what might happen in the months ahead. The central bank is widely expected to temper runaway expectations of more rate cuts in the approaching year, particularly as inflation remains stubborn.
"I think we'll get a cut tomorrow, but I think the language and the tenor will probably be as hawkish as we've seen from Powell in a while," said Ross Mayfield, investment strategist at Baird. "While they're not going to act on policy that hasn't yet been made, I think that they will be a little hesitant to commit to, say, four-plus rate cuts in 2025 when there's so much unsettled.
In turn, hawkish commentary on Wednesday could tee up stocks for a selloff. But Mayfield added he was optimistic that volatility around Fed meetings usually doesn't linger for very long. "We've seen some big moves on days where the Fed has announced a policy change and how it spoke — and these were either reversed later on, or gains were given back or losses cut later on. So I'm not overly worried about what happens in the immediate aftermath tomorrow," he added.Futures tied to the Dow Jones, S&P 500 and Nasdaq 100 were all marginally below the flatline shortly after 6 p.m. ET.
FED INTEREST RATES ECONOMY INVESTORS STOCK MARKET
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