Wall Street Jitters Ahead of Fed Meeting: Rate Cut Magnitude Uncertain

Wall Street is on edge as investors nervously await the highly anticipated Federal Open Market Committee (FOMC) meeting. While a Federal Reserve rate cut is widely expected, the market remains divided on the extent of the reduction.

Current implied probabilities suggest a 60% chance of a 50-basis-point cut, but a smaller 25-basis-point cut has gained traction lately, with odds rising to 40%, according to CME FedWatch. This growing expectation of a smaller cut has pushed Treasury yields higher across the curve, reflecting a shift in market sentiment.

Amid this uncertainty, the CBOE Volatility Index (VIX), often seen as a gauge of market fear, spiked 8%, indicating heightened investor anxiety. The U.S. dollar has steadied, recovering from overnight losses.

Commodities have retreated, with oil prices down 0.9%, despite renewed tensions in the Middle East, and silver slipping 1%. Gold remained flat. In the cryptocurrency market, Bitcoin BTC/USD declined 1.5%, dipping below the $60,000 mark after a 3.6% rally on Tuesday.

Performance of Major U.S. Indices and ETFs

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S&P 500:

Down 0.2% to 5,622.28
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Dow Jones:

Down 0.3% to 41,482.17
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Nasdaq 100:

Down 0.3% to 19,369.89
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Russell 2000:

Down 0.5% to 2,201.42

ETF Performance

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SPDR S&P 500 ETF Trust (SPY):

Down 0.3% to $561.44
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SPDR Dow Jones Industrial Average (DIA):

Down 0.3% to $416.11
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Invesco QQQ Trust Series (QQQ):

Down 0.4% to $471.53
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iShares Russell 2000 ETF (IWM):

Down 0.5% to $218.40
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Energy Select Sector SPDR Fund (XLE):

Up 0.2%
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Technology Select Sector SPDR Fund (XLK):

Down 0.8%

Stock Movers

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ResMed Inc. (RMD):

Fell over 5% after Wolfe Research downgraded the stock from ‘Peer Perform’ to ‘Underperform.’
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General Motors Co. (GM):

Shares surged over 2% following the announcement that its electric vehicle customers will soon be able to access Tesla Inc.’s (TSLA) Supercharger network using a GM-approved adapter.

The Fed’s decision on the rate cut magnitude will undoubtedly have a significant impact on the markets. Investors are on edge, closely watching for any hints on the future trajectory of monetary policy. The FOMC meeting is a crucial event for the financial world, with its implications extending beyond Wall Street to the broader economy.