Wall St mixed ahead of Fed verdict as doubts grow over 2026 cuts

Wall Street’s main ‌indexes ​were mixed on Wednesday, ahead of a ‌closely watched Federal Reserve decision widely expected to deliver a rate cut, while investors grew ​uncertain over the extent and pace of rate reductions in 2026.

The central bank’s ongoing meeting is likely one of its most divisive in ‍years, as policymakers seek a delicate balance ​between reducing borrowing costs to support the labor market and curbing any reacceleration of inflation.

A prolonged absence of fresh economic data ​following the recent ⁠government shutdown, combined with uncertainty over who will lead the Federal Reserve next year, is adding to policymakers’ challenges.

White House economic adviser Kevin Hassett, an advocate for interest rate cuts, is a front-runner for the position.

Traders are pricing in a near 90% chance that the Federal Reserve will announce its decision to cut interest rates by 25 basis points at 2 p.m. ‌ET, according to CME’s FedWatch Tool, and are also betting on additional easing in 2026.

“Markets at the moment are positioned ​for ‌a hawkish Fed cut. Therefore, ‍the bar for a ⁠dovish surprise is low. I think the Fed dot will be front-loaded to imply two cuts in 2026. No cuts in 2027 and no cuts after that,” said Elias Haddad, global head of markets strategy at Brown Brothers Harriman.

The Fed’s balance sheet and plans to purchase short-term bills to ensure ample liquidity in the banking system will also be on investors’ radar.

Inflation worries have already prompted market participants to price in higher interest rates by the end of 2026 in Australia, Canada and Japan.

At 11:23 a.m. ET, the Dow Jones Industrial Average rose 234.39 points, or 0.49%, to 47,794.68, ​the S&P 500 gained 7.61 points, or 0.11%, to 6,848.12, and the Nasdaq Composite lost 47.70 points, or 0.20%, to 23,528.79.

U.S. stocks have rallied since late November on lower rate expectations, bringing the S&P 500 within 1% of a record high. The Russell 2000 Index, which tracks small caps, also hit a record high, outperforming Wall Street’s benchmark this quarter

The rest of the week is likely to be dominated by earnings reports from major artificial intelligence players, including software company Oracle and chipmaker Broadcom.

Investors will scrutinize the results as worries about debt-fueled corporate spending, complex deal-making across the AI sector and uncertainty over how companies will monetize the technology have sparked recent sell-offs in equity and debt markets.

The tech sector was down the most, pressured by an over 2% decline in Microsoft.

On the flip side, energy equipment manufacturer GE Vernova surged 13% ​after forecasting higher revenue in 2026, signaling strong demand for its AI-related infrastructure.

Lending giant JPMorgan Chase edged up 1.8%, recovering from a nearly 5% drop in the previous session after saying it expects higher expenses next year.

Advancing issues outnumbered decliners by a 1.58-to-1 ratio on the NYSE and by a 1.29-to-1 ratio on the Nasdaq.

The S&P 500 posted 19 new 52-week ​highs and five new lows, while the Nasdaq Composite recorded 91 new highs and 58 new lows.