Fed holds fire as futures price under 10% odds of a hike on Wednesday
Fed funds futures on Friday put the probability of an interest rate rise at Wednesday's Federal Open Market Committee decision at less than 10 per cent, according to LSEG data, even after the central bank lifted rates in September for the first time since 2023. The FOMC meets over two days, with the decision due on Wednesday, and analysts expect any further increase to come at the December meeting instead.
The Fed has continued to flag inflation running above its target, while weakening consumer confidence and signs of stress in the labour market have clouded the outlook. Investors will read the statement for guidance on the path ahead, with the first estimate of third-quarter GDP due on Thursday and the October core Personal Consumption Expenditures index, the Fed's preferred inflation gauge, also on the calendar. Consumer confidence, new home sales, personal income and spending and the Employment Cost Index round out the week.
Earnings from the largest technology companies will test the market's appetite for artificial intelligence spending. Alphabet and Microsoft report on Wednesday and Amazon on Thursday, with investors focused on AI outlays, cloud growth and the returns on data-centre investment. Visa, Coca-Cola, Boeing, UPS, Eli Lilly, Mastercard, Intel, Merck, Caterpillar, Shell, ExxonMobil, Chevron, BP, AbbVie, Verizon, T-Mobile US, Chipotle, eBay and GE Vernova also report.
US equities closed lower on Friday as crude oil climbed. Brent rose 3.1 per cent to above $116 a barrel, its highest since June 2022. The S&P 500 fell 39.75 points, or 0.5 per cent, to 7,623.68, the Dow Jones Industrial Average dropped 652.82 points, or 1.2 per cent, to 52,215.16, and the Nasdaq Composite lost 53.52 points, or 0.2 per cent, to 25,955.34.
Investors will weigh the Fed's guidance, corporate results and the data against persistent inflation, oil supply concerns and global trade tensions, with the November 3 midterm elections shaping sentiment into the following week.
