The S&P 500 traded in a holding pattern on Wednesday as investors waited for the Federal Reserve’s interest rate decision and its updated economic outlook. Both are expected to influence market sentiment heading into the final weeks of the year.
By 1:06 p.m. ET, the Dow Jones Industrial Average was up 240 points, or 0.5%. The S&P 500 inched higher by 0.1%, while the Nasdaq Composite slipped 0.3%.
Fed rate decision in focus
The Federal Reserve is set to conclude its final policy meeting of the year later today. Markets widely expect a 25-basis-point rate cut. Recent signs of cooling in the labor market have supported these expectations. Still, investors remain cautious about the possibility of a hawkish message, especially given the lack of fresh data from October and November due to the prolonged government shutdown.
ING analysts said a 25-point cut is “90% priced in,” warning that the Fed will likely pair it with a hawkish tone and signal a potential pause in January.
Despite broad expectations for a cut, reports suggest the policy committee could be unusually split. Concerns about sticky inflation and limited economic data may fuel disagreements. The Fed will also release updated economic projections, offering insight into how divided policymakers remain.
Analysts at ABN Amro noted that the 2025 and 2026 “dot plots” will likely show significant dispersion, reflecting high uncertainty around the longer-term policy path.
Trump prepares final round of Fed chair interviews
Separately, the Wall Street Journal reported that President Donald Trump will begin final interviews for the next Federal Reserve Chair in the coming days. Former Fed Governor Kevin Warsh is scheduled to meet with Trump on Wednesday, with additional candidates following.
One contender is Kevin Hassett, the White House economic adviser widely seen as a leading candidate to replace current Chair Jerome Powell when his term ends next year.
Earnings from Oracle and Adobe ahead
Beyond the Fed meeting, investors are also watching earnings reports from major cloud and software companies. Oracle (NYSE: ORCL) will report results after Wednesday’s close. The company has gained momentum this year due to its partnership with OpenAI, positioning itself as an important provider of computing power for AI models.
Adobe (NASDAQ: ADBE) is also set to announce earnings after the bell. Its stock has fallen more than 21% this year, underperforming the broader tech sector.
Other corporate results also moved markets. AeroVironment (NASDAQ: AVAV) shares dropped after the drone maker missed second-quarter expectations and cut its outlook. Cracker Barrel (NASDAQ: CBRL) also fell after lowering its sales forecast, citing ongoing challenges following a poorly received rebrand.
On the upside, Chewy Inc. (NYSE: CHWY) posted better-than-expected third-quarter results, showing improved profitability and solid revenue growth, though shares were slightly lower in midday trading.
