Wall Street Holds Off on Big Bets Ahead of Fed Day: Markets Wrap

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Stocks tread water as Wall Street traders held off from making big bets with less than 24 hours until the Federal Reserve’s final interest-rate decision of 2025.

The S&P 500 ended little changed after a warning from JPMorgan Chase & Co. on higher than expected costs and called consumers “fragile.” The lender fell more than 4%. The blue-chip Dow slid while the Nasdaq 100 made a small advance. The rate on 10-year Treasuries hovered at around 4.18% following a government bond auction, while the dollar was little changed and Bitcoin reversed early losses.

Kevin Hassett, the frontrunner in President Donald Trump’s search to replace Fed Chair Jerome Powell, said at an event Tuesday that he sees plenty of room to substantially lower rates, even more than a quarter-point cut.

“If the data suggests that we could do it, then — like right now — I think there’s plenty of room to do it,” he said during the Wall Street Journal CEO Council Summit.

Money markets are pricing around two cuts in 2026 after a likely quarter-point reduction tomorrow — a retreat from more optimistic forecasts in recent weeks. Many market watchers, including Tom Essaye, are worried about the risk of a hawkish cut, where the Fed lowers interest rates but signals it’s done with rate cuts for the moment.

“It’s not too much of an exaggeration to say that the rate cut is actually the least important part of this meeting,” said the founder of The Sevens Report. The market “cares much more that the Fed signals it will continue to cut rates and does not signal a pause in the rate-cut cycle.”

The Treasury Department’s monthly auction of 10-year notes at 1 p.m. New York time drew a yield of 4.175%, matching the level indicated by trading just before the bidding deadline, when it was about a basis point higher on the day.

A dayslong slump in US government bonds has curbed risk appetite as traders grow cautious about the pace of monetary easing beyond Wednesday’s meeting. For now, the Fed’s decision and its guidance for 2026 remain the key focus for markets.

“If the Fed is too hawkish, we expect the White House to soon announce Powell’s replacement,” said Fundstrat’s Tom Lee. That would be a “market clearing event,” in his view.

Stocks had initially risen after better-than-expected job openings data for October. The number of available positions climbed to 7.67 million, a Bloomberg survey of economists called for 7.12 million. But gains from the stale data, delayed by a government shutdown, didn’t hold.

“It’s hard to read too much into the JOLTs report – the outperformance in job openings is ostensibly hawkish (which is why yields turned higher on the release), but the pace of layoffs rose too,”said Vital Knowledge’s Adam Crisafulli.

US stocks may turn more volatile after tomorrow’s meeting than after other recent decisions, with Bloomberg options data showing an implied move of 0.7% in either direction.

Globally, government debt markets have been under pressure as central bankers signal that their easing cycles are coming to an end. On Tuesday, Australia’s Michele Bullock declared her country’s easing phase over, following comments from the European Central Bank’s Isabel Schnabel that she’s comfortable with the next move being higher. The Bank of Japan is expected to hike next week.

“Given all the tension in global bond markets at the moment, the meeting of the Fed could potentially add fuel to the fire,” said Vincent Juvyns, chief investment strategist at ING in Brussels. “Investors will also be watching very closely the results of Oracle and Broadcom. There’s a lot at stake this week.”