What’s Driving the Markets Today

Futures tied to major U.S. indices are trading slightly above equilibrium as all eyes focus on the long-awaited Federal Reserve interest rate decision. Analysts expect a so-called “hawkish cut” – the Fed is likely to lower rates but set a limit on future reductions. At the same time, markets are already pricing in further easing in 2026, as President Donald Trump – a long-time supporter of rapid rate cuts – prepares a final round of interviews for the next Fed chair. In the corporate sector, attention will be on cloud giant Oracle’s AI plans when it reports earnings after the market close.

1. Futures remain steady
   U.S. stock futures rose slightly on Wednesday as investors prepare for the long-awaited and potentially contentious Fed rate decision.

As of 02:52 ET (07:52 GMT), Dow futures were nearly unchanged, while S&P 500 and Nasdaq 100 futures gained 0.1% each.

In the previous session, major Wall Street indices showed mixed movement, with attention focused on the start of the Fed’s two-day meeting.

The Dow Jones and S&P 500 ended Tuesday lower, while the tech-focused Nasdaq Composite rose 0.1%.

Some factors affected sentiment, including a slight increase in U.S. job openings in October. Hiring remains low, and quits are near the lowest levels in five years – signs of economic uncertainty some economists link to broad U.S. tariffs.

2. Expecting a “hawkish cut”
   The Labor Department report confirmed expectations that the Fed is likely to cut rates at the end of the meeting but will signal a stricter outlook for the coming months.

According to CME FedWatch, the probability of a 0.25 percentage point cut is around 88%. In theory, lowering rates – which the Fed already did in September and October, bringing the target range down to 3.75%-4% – could boost investment and hiring but carries the risk of renewed inflation acceleration.

While markets are confident a cut will occur, media reports indicate policymakers could be unusually divided due to concerns about persistent inflation and a lack of fresh economic data following the government shutdown. An updated summary of Fed members’ economic projections is also expected.

To satisfy both sides of the debate, Fed Chair Jerome Powell is likely to recommend a cut this month and use the post-meeting press conference to signal that the threshold for further easing will be high.

However, setting this high threshold may prove challenging. By January, officials will have more up-to-date employment and inflation data, and it is unclear what policy these numbers will support.

3. Trump prepares final round of interviews for new Fed chair
   President Donald Trump plans to begin the final round of interviews for the next Fed chair in the coming days, according to the Wall Street Journal.

According to senior administration officials, Trump and some of his advisors will interview former Fed governor Kevin Warsh on Wednesday and will soon meet other candidates.

One of the candidates is Kevin Hassett, White House economic advisor, who many media outlets identify as the leading candidate to replace Powell when his term ends next year.

Hassett is a close ally of Trump and has long called on the Fed and Powell to cut rates quickly and aggressively to support the economy. Some economists believe Hassett may advocate for rapid easing, but with only one vote in the 12-member FOMC, his influence may be limited.

Analysts at ING note that markets have already priced in “so much easing” despite the expected “hawkish cut” from the Fed. “Clearly, this is the Kevin Hassett effect, which could bring a softer tone to FOMC expectations in February,” they comment.

4. Oracle reports earnings
   Oracle will be a key company in Wednesday’s earnings calendar, with analysts closely watching the cloud giant’s AI plans.

Thanks to its partnership with OpenAI, Oracle has transformed this year from a smaller cloud player into a key provider of computing power needed for AI models.

A large contract portfolio exceeding $400 billion boosted Oracle’s stock earlier this year, temporarily pushing the company’s market capitalization close to $1 trillion and placing co-founder Larry Ellison among the world’s richest people.

However, enthusiasm has begun to fade as observers worry that Oracle may rely too heavily on OpenAI and has borrowed too much to build new data centers.

5. Adobe reports earnings
   Adobe will also release its latest quarterly results after the Wall Street session.

The company behind Photoshop and Acrobat shares has fallen over 21% this year, lagging the tech-heavy Nasdaq Composite.

Analysts at Stifel note that a key factor for Adobe’s weaker performance is the expectation that AI will transform creative departments, “making creators more efficient and reducing license counts over time.”

They add that potential catalysts for a rapid improvement in sentiment toward Adobe’s stock remain unclear, but a successful AI-based strategy is still in the early stages.

Adobe could establish itself as a sort of “Switzerland” in the AI race, providing a central platform for AI generation where users can “test, use, and pay for external models.”