Stock Market Update

[BRIEFING.COM] Without the benefit of hearing directly from Fed Chair Powell (his press conference begins at 2:30 p.m. ET), we can say that there was little surprise in the decisions made at today's meeting.

The FOMC voted to cut the target range for the fed funds rate by 25 basis points to 3.75% to 4.00%, as expected. The vote was not unanimous (also expected). Fed Governor Miran preferred a 50-basis-point reduction (not surprising), while Kansas City Fed President Schmid preferred no cut at all (slightly surprising).

Separately, the Fed announced that it will end its quantitative tightening activity beginning on December 1. This news is not surprising, although there was some speculation that QT could end, effective immediately.

Beginning December 1, the Fed will roll over at auction all principal payments from its holdings of Treasury securities and agency securities into Treasury bills.

With respect to the policy directive, there was an acknowledgment that inflation "has moved up since earlier in the year and remained somewhat elevated." That was paired with an acknowledgment that "downside risks to employment rose in recent months." It was also said that "uncertainty about the economic outlook remains elevated."

None of that is surprising, and it sounds like an opening for Fed Chair Powell to sound non-committal about the Fed's next move while expressing some hope that government data will start flowing again to help the Fed make a better-informed policy decision.

We don't think that changes the market's prevailing view that another 25-basis-point cut will be made at the December FOMC meeting, but, again, that is without the benefit right now of hearing what Fed Chair Powell says at his press conference. The fed funds futures market currently assigns an 84.4% probability to another cut at the December meeting—down from 95.5% a week ago, but still a high probability. 

Since the market hasn't found reason to be surprised thus far, its reaction to today's decision has been understandably muted since the FOMC decision became known.

The Nasdaq Composite is up 0.6%, the Russell 2000 is up 0.5%, the Dow Jones Industrial Average is up 0.3%, and the S&P 500 is up 0.2%.