Rate hike odds hit 73% as the Fed decides today
Published on October 28, 2026
The Fed decides today at 2 p.m. ET, and US stock indexes walk into the meeting on two straight up days. A hold is a lock. What matters is what Kevin Warsh says about December, now that traders see 73% odds of a Fed rate hike at the next meeting. Microsoft and Alphabet report right after the close.
Wall Street heads into the Fed on a two-day bounce
On Tuesday the S&P 500 rose 0.60% to 7,722.60 and the Nasdaq Composite gained 1.18% to 26,477.81, according to HDFC Sky's closing data. The Dow barely moved, up 0.03%. The S&P 500 now sits within 1.2% of its record, the AP notes.
Chips did the heavy lifting again, with the SOX up 3.6%. The rally is thin, though. The equal weight S&P 500 ETF gained just 0.11%, and the Nasdaq printed 239 new lows against 62 new highs, per CappNotes. A few giants are holding up the index.
This morning Nasdaq 100 futures are up about 0.4%, S&P 500 futures are flat and Dow futures are off 0.2%, Investing.com reports. In Asia, the Kospi jumped more than 5% after record results from SK Hynix.
Fed decision: a hold today, December is the real question
The policy rate sits at 3.75% to 4% after September's hike. Markets price more than 90% odds of a hold today, based on CME FedWatch data cited by Euronews. December flips the script: 73% odds of a quarter point hike, up from 42% a month ago, Kiplinger reports.
Politics is in the room too. The midterms are next Tuesday. "The Fed doesn't want to poke the White House in the eye six days before an election," says Joseph LaVorgna, chief US economist at SMBC, in comments carried by Euronews.
The bigger risk for stocks is the vote count. JPMorgan expects at least two hawkish dissents, Reuters reports. Cleveland's Beth Hammack and Dallas's Lorie Logan have argued rates are still too low to cool prices. "We expect a hawkish hold in October with the Fed delivering one more hike at year end," says Paul Eitelman of Russell Investments.
Microsoft and Alphabet are the second test tonight
The Fed won't be the only thing moving the Nasdaq. Microsoft and Alphabet report after the bell. Both are among the biggest spenders on AI, and the market wants proof that the money is starting to pay off.
"Big Tech earnings could prove just as important as monetary policy for the direction of risk appetite," says market analyst Daniela Hathorn, quoted by TheStreet. Two catalysts in about two hours, on an index resting on very few names. Expect a lively evening.
The dollar and the euro wait on Warsh
The dollar index sits near a two week high at 102.37, per Reuters, and EUR/USD trades around 1.1125 this morning, per the AP. The ECB meets Thursday, so a firm Warsh would widen the gap the euro is already pricing. Brent is edging up toward $114, not enough to change the picture.
Key levels today
| Instrument | Level (support / resistance) | Change | Scenario / What to watch |
|---|---|---|---|
| S&P 500 | Support 7,700 (Monday's high at 7,702) / resistance 7,818.93 (Oct 6 record, per The Motley Fool) | +0.60% (daily, Tuesday) | Holding 7,700 after Warsh keeps the record in play. A break below erases the two day bounce |
| Nasdaq Composite | Support 26,000 / resistance 26,703 (Oct 21 close, last swing high) | +1.18% (daily, Tuesday) | Above 26,703 after Microsoft and Alphabet, the October drop is largely repaired. Below 26,000, the chip bounce fails |
| US 10-year yield | 5.00% threshold | Flat, under 1 bp (daily, Tuesday) | A sustained move above 5% after the press conference would weigh on tech |
| EUR/USD | Support 1.1095 (UOB) / resistance 1.1150 | -0.26% (daily, Tuesday) | Hawkish Fed with dissents: test of 1.1095, UOB's target per FXStreet. Above 1.1150, pressure on the euro eases |
Economic calendar (Paris time)
- 3:30 p.m., EIA crude inventories: a large draw could push Brent back above $115 and firm up the hawkish tone expected from the Fed.
- 7:00 p.m., Fed decision: a hold with two or more dissents for a hike makes December close to certain and lifts the dollar. A unanimous hold gives the Nasdaq room to breathe.
- 7:30 p.m., Warsh press conference: if he stresses getting inflation back to 2% quickly, markets will read it as a December hike. If he stays vague, long yields can ease.
- Thursday 1:30 p.m., Q3 GDP and PCE: a hot PCE would lock in the December call ahead of the ECB at 2:15 p.m.
What it changes for your session
- No new positions from 1:55 p.m. to 2:45 p.m. ET: the statement and the press conference can whip prices both ways within minutes.
- The Nasdaq 100 is today's most nervous instrument, with the Fed at 2 p.m. and Microsoft and Alphabet after the close. Cut size if you hold into the bell.
- What would break today's read: a unanimous Fed and a Warsh who dodges December. The hike bet would lose ground fast.
- After the decision, wait for the first 15 minute candle to close before acting on any move larger than 0.5%.
- On a prop firm account, your daily loss limit matters more than any bet on a press conference.
The bottom line
The Fed should hold today, but the market is already betting on a December hike. The Nasdaq comes in strong yet narrow, with two tests on the same evening: Warsh, then Big Tech.
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This is not investment advice. For information purposes only.