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Fed Decision Looms: Market on Edge
29 Oct
Summary
- Markets anticipate a 90% chance of the Fed leaving rates unchanged.
- Fed chair's remarks could cause volatility even if rates stay steady.
- Nasdaq 100 and S&P 500 face risks of pullback post-Fed announcement.
US stock futures edged higher as markets awaited the Federal Reserve's interest-rate decision on October 29, 2026. Investors are factoring in a roughly 90% probability that the Fed will maintain its target interest-rate range of 3.75% to 4.00%. However, future rate hike expectations are a significant point of focus, with market pricing suggesting potential increases later in 2027.
The critical element remains the Fed chair's commentary following the announcement. Even if interest rates are held steady, hawkish language could trigger substantial market volatility and selling pressure. This uncertainty suggests a cautious approach, with waiting for the market to digest the news potentially being a more prudent strategy than immediate trading.
Technical indicators for the Nasdaq 100 and S&P 500 suggest they are approaching resistance and overbought conditions on shorter timeframes, increasing the risk of a pullback. Specific levels have been identified for potential declines in the VanEck Semiconductor ETF (SMH), the Nasdaq, and the S&P 50, should selling intensify.
Despite near-term risks, a broader constructive outlook suggests a market bottom could be forming. The timing of entry remains crucial, with Thursday potentially offering a better opportunity if the Fed's communication is not overly hawkish. A severe selloff might defer entry opportunities to Friday or the following week.
