Fed to Decide Interest Rates This Week With S&P 500 Close to Its Peak

The S&P 500 is very close to reaching a new all-time high. Now, all eyes are on the Federal Reserve. The Fed will decide this week whether to lower interest rates for the first time this year. That decision, and what Fed Chair Jerome Powell says about the months ahead, will help determine whether stocks can keep climbing or start to slow down.

What the Fed Will Decide This Week

The Federal Reserve meets this week to set interest rates for the final time this year. Many economists expect a small cut because recent data shows slower hiring and lower inflation. Lower rates make loans cheaper for families and businesses.

The key moment comes on Wednesday, when Fed Chair Jerome Powell will explain the decision and what it means going forward. Investors want to know if this is the beginning of a series of cuts or just a one-time move.

The Fed will also release new projections that show how officials see the economy performing next year — including jobs, growth, and inflation. This meeting is significant because the group of policymakers who vote on interest rates will change in the new year, which could affect future decisions.

Stocks Hold Firm While Bonds Price in More Risk

Equities have stayed near record territory, but the bond market is signaling tighter conditions ahead. The yield on the 10-year Treasury climbed again on Friday, capping a week of sharp swings. Higher yields reflect concern that inflation may not slow quickly enough to justify aggressive rate cuts next year.

That matters for companies and households. Longer-term rates influence borrowing costs for mortgages, business credit, and capital spending — areas that are still running above pre-pandemic levels. Even a small rise in yields can limit the boost that lower short-term policy rates would normally provide.

The split leaves investors weighing two scenarios: a mild economic slowdown that allows the Fed to ease gradually, or a downturn that forces more urgent action later. Powell’s comments this week may help decide which side gains the upper hand.

A Year-End Rally Awaits Direction From the Fed

Stocks have climbed in recent weeks on the expectation that interest rates are set to move lower. What markets still lack is clarity on why the Fed is ready to cut. If policymakers argue that inflation progress has improved enough to justify cheaper borrowing, equity gains may hold. But if Powell indicates the Fed is reacting to slower hiring and weaker demand, it would shift the focus to growth risks heading into next year.

The message delivered on Wednesday will help determine whether the rally extends through December or fades as investors reassess the outlook.

Bitcoin No Longer Moving With the Market

Bitcoin is not tracking the stock market the way it has in recent years. Major U.S. stock indexes have risen this year, but bitcoin is still trading below its level at the start of the year. The two have often moved in the same direction when investors take on more risk. Now, cryptocurrency trading is reacting to different forces, including regulatory uncertainty and reduced participation from large investors. As a result, bitcoin has not followed the gains in equities and remains on its own path.

Schedule of Economic Data and Earnings

A number of government reports and company results are due this week that provide updated information on jobs, business activity, and consumer spending.

Tuesday

• JOLTS job openings (Sept & Oct): Read on labor demand after recent layoff increases
• Small business sentiment: View into hiring and pricing plans among smaller employers
• Earnings — AutoZone, GameStop, Campbell Soup: Indicators of household spending priorities

Wednesday

• Fed rate decision + Powell briefing: Sets the direction for borrowing costs entering 2026
• Employment cost figures / mortgage demand: How pay and housing activity are responding
• Earnings — Oracle, Adobe: Outlook on corporate tech budgets and cloud spending

Thursday

• Weekly unemployment claims: First signal of any pickup in job loss
• Wholesale trade data: Insight into retail restocking and demand
• Earnings — Broadcom, Costco, Lululemon: Data points on enterprise chips, consumer staples, and discretionary spending

Friday

• No major economic releases
• Earnings — Rent the Runway: Apparel demand among younger consumers

What the Fed Will Explain on Wednesday

The Federal Reserve will outline its latest interest rate decision this week and give an update on how it views the job market, inflation, and borrowing conditions. Powell’s comments will show whether the recent slowdown in hiring and cooling prices are enough for the central bank to begin easing policy, or whether more evidence is needed.

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