Key Highlights

  • The Federal Open Market Committee meets October 27 and 28, 2026 under Chair Kevin Warsh, with a hold the base case, while CME FedWatch put the odds of a hike at this meeting at 12.7%.
  • Markets price about 70% odds of a December hike, so a pause with hawkish wording could matter more than the hold, and the 10-year Treasury yield sits near 4.99%.
  • The S&P 500, which SPDR S&P 500 ETF Trust (NYSEARCA:SPY) tracks, rose 0.70% to 7,676.77 on October 26, 2026, within 1.8% of its record, after two straight weekly losses, and the VIX fell 5.45% to 18.39.
  • RBC strategist Lori Calvasina sees a possible 5% to 10% pullback toward 7,000 to 7,400, while Apollo's Torsten Slok says artificial intelligence has produced little financial payoff outside technology.

What the Fed Is Expected to Do

The Federal Open Market Committee begins a two-day meeting on Tuesday, October 27, 2026, and announces its decision on Wednesday, October 28. A hold is the base case. CME FedWatch put the odds of a hike at this meeting at 12.7%, another source near 10%, and a prediction market gave more than 90% for a hold. The current policy rate was quoted inconsistently across sources, so it is not stated here. Markets also price about 70% odds of a hike in December, which means the focus is on guidance, not the decision itself. The 10-year Treasury yield near 4.99% shows that bond investors already expect rates to stay high.

What a Hawkish Pause Means

A hawkish pause occurs when the central bank leaves its rate unchanged but signals that it may raise it later. For stocks, the signal can matter more than the pause, because a higher expected path for rates lowers the present value of future earnings, which weighs most on technology and other growth shares. The S&P 500 closed at 7,676.77 on October 26, 2026, up 0.70%, with the Nasdaq Composite up 0.82% to 26,169.38, yet breadth was thin as Nasdaq new lows of 349 outnumbered new highs of 82. A market near a record with weak breadth can react sharply to a firm message, because fewer stocks are holding up the index.

Risks and What to Watch

Strategists differ, and that matters because the index sits close to its record. RBC's Lori Calvasina sees a possible pullback of 5% to 10% toward 7,000 to 7,400, and Deutsche Bank says the technology sell-off has room to run. Investors can watch the 5-year Treasury auction at 1:00 p.m. ET on October 27, the decision at 2:00 p.m. ET on October 28 and technology earnings from Microsoft and Alphabet that evening. SPDR S&P 500 ETF Trust (NYSEARCA:SPY) is a broad fund, so a Fed surprise can move it even when individual earnings are strong. A Fed decision is a single event, and the effect on prices often fades within days. Nothing in this article is investment advice.

Where Things Stand

The answer is that a hold is the most likely outcome, so the market reaction depends on whether the Federal Reserve sounds hawkish about a possible December hike. SPDR S&P 500 ETF Trust (NYSEARCA:SPY) tracks the S&P 500, which sits within 1.8% of its record after a 0.70% gain on October 26, 2026. The decision on October 28 and the earnings reports that follow are the next catalysts.