Stocks: Everything is on hold until the Fed delivers that rate cut on Wednesday

The S&P 500 sits at just over 6,870 this morning, a few points below its all-time high of 6,890.89 and futures are flat before the opening bell in New York. Traders are holding their breath until Wednesday, when the Federal Open Markets Committee of the U.S. Federal Reserve has its December meeting, at which Chairman Jerome Powell is widely expected to deliver an interest rate cut of 0.25%. The CME FedWatch futures index shows an 87.4% chance that the Fed will make that cut. 

Until then, don’t expect much from the markets. Asian markets were mostly up this morning and Europe was flat. The VIX “fear” index (which measures volatility) is down 10.33% over the last five sessions.

“All roads this week will point to Wednesday’s FOMC,” Jim Reid and his colleagues at Deutsche Bank told clients this morning. If the Fed reduces rates to the 3.5% level that would be six cuts since September 2024, they said.

The market will get moving again once it digests Powell’s statement and his remarks to the press. Recently, Fed members have suggested they are more worried about weakness in the labor market than they are about rising inflation—which is why that rate cut feels locked in. Any change of tone could move Wall Street into risk-off mode.

“The decision is unlikely to be unanimous, with dissent anticipated from both hawkish and dovish members. Should four or more officials break ranks, it would mark the largest split since 1992,” Reid et al said. “Beyond the headline move, the tone of Chair Powell’s press conference and the accompanying statement will be critical. We expect Powell to emphasize that the hurdle for further cuts in early 2026 is high, signaling a near-term pause. This guidance will be key to maintaining credibility ahead of likely softer labor market data due later in December.” 

The other measure that is likely helping persuade the Fed into producing a new round of cheaper money is declining consumer confidence. “Consumers remain depressed in their assessment of the economy. Concerns over higher prices and the health of labor markets continue to dominate consumers’ psyche,” Grace Zwemmer at Oxford Economics said in a research note.

“Households still feel squeezed, despite expectations improving,” Piper Sandler’s Nancy Lazar and Diana Hagedorn told clients.

Samuel Tombs and Oliver Allen at Pantheon Macroeconomics agreed: “The U.S. consumer looks less resilient after last week’s income and spending report. … We think September’s data foreshadow a very weak Q4.”

Here’s a snapshot of the markets ahead of the opening bell in New York this morning:

• S&P 500 futures were flat this morning. The last session closed up 0.19%. 
• STOXX Europe 600 were flat in early trading. 
• The U.K.’s FTSE 100 was flat in early trading. 
• Japan’s Nikkei 225 was up 0.18%. 
• China’s CSI 300 was up 0.81%. 
• The South Korea KOSPI was up 1.34%. 
• India’s NIFTY 50 is down 0.86%. 
• Bitcoin was at $92K.

This story was originally featured on Fortune.com