The Federal Reserve held its benchmark interest rate at 3.75% to 4% on October 28. The vote was 10 to 2. September's quarter-point increase stays in place.
Lisa Cook and Beth Hammack voted against the hold. Both wanted a quarter-point rise at this meeting, per Reuters. The statement kept the line that inflation "remains elevated" and upgraded the economy's description to "strong" from September's "solid", per Reuters.
The first market read split down the middle.
Right after the announcement, the S&P 500 finished 0.1% higher and the Nasdaq Composite 0.1% lower, per Reuters. By 19:44 UTC, MarketRadar's snapshot showed a firmer tape. The S&P 500 stood at 7,738, the Dow Jones Industrial Average at 52,480 and the Nasdaq at 26,502. Each sat above its October 27 close. The Dow's 102.43-point climb from 52,377.57 was the widest point gain of the three. The Nasdaq's 24.19-point rise from 26,477.81 left it the laggard in percentage terms at 0.09%.
| Index | October 27 close | Snapshot, 19:44 UTC October 28 | Change |
|---|---|---|---|
| S&P 500 | 7,722.60 | 7,738 | +15.40 (+0.2%) |
| Nasdaq Composite | 26,477.81 | 26,502 | +24.19 (+0.09%) |
| Dow Jones | 52,377.57 | 52,480 | +102.43 (+0.2%) |
Why it matters
The hold keeps December as the next live meeting. Two votes for a hike show the committee's center of gravity has not moved toward cuts. Kay Haigh of Goldman Sachs Asset Management said "We expect the Fed to resume rate hikes in December," per Reuters. She tied that call to September's consumer price print of 3.7% year on year. Karl Schamotta of Corpay called two dissents "a dovish surprise at the margin," per Reuters, against expectations of three or four.
The statement dropped September's claim that the hike would support a timelier return to the 2% goal, replacing it with a wait for more information. "The accumulation of more information will help the Committee determine the policy stance appropriate," the Committee said in its statement, per Reuters. Yesterday's session set the stage, with chips carrying the benchmarks into the decision, as covered in S&P 500, Nasdaq rise on chip rally as Dow slips ahead of Fed decision; bonds and oil told another part of the story in India bonds, oil spike Fed decision.
Bonds moved with the statement, not against it. The 2-year Treasury yield ended the day at 4.776%. Its daily move was 3.9 basis points, per Reuters. The 10-year yield ended at 5.047%, up 5 basis points on the day, per Reuters. The 30-year yield ended at 5.338%, up 3.8 basis points, per Reuters. The gap between those two yields is 27.1 basis points on MarketRadar's calculation. The dollar index added 0.02%, per Reuters.
Asia had set a firmer tone earlier. South Korea's Kospi surged more than 6% after SK Hynix posted record results on AI memory demand, per Samuel and Co's morning brief. Japan's Nikkei 225 added 0.7% and the broader Topix 0.3%, per Financial Express.
What to watch
- September personal income and outlays, including the PCE price index, plus the advance estimate of third-quarter GDP, both due October 29 at 12:30 GMT, per The Edge
- Microsoft and Alphabet results after the October 28 close, flagged in Samuel and Co's morning brief, landing before Thursday's open
- The October jobs report, due November 6 at 13:30 GMT, per The Edge
- The December 8-9 FOMC meeting, which carries new economic projections, per The Edge
Key points
- The Fed held its benchmark at 3.75%-4% on October 28 in a 10-2 vote; Cook and Hammack voted against the hold, wanting a quarter-point rise
- First reaction, per Reuters: S&P 500 up 0.1%, Nasdaq down 0.1%; 19:44 UTC snapshot: S&P 500 7,738, Dow 52,480, Nasdaq 26,502
- Treasury yields after the decision: 2-year 4.776%, 10-year 5.047%, 30-year 5.338%; the dollar index added 0.02%
- The data backdrop: September CPI 3.7% year on year, September PPI 6.3% year on year, September payrolls 29,000
- December is the next decision point, with Goldman Sachs Asset Management expecting the Fed to resume hikes then, per Reuters
MarketRadar take
The hold, two hike dissents and "strong" economy language read as a pause, not a pivot. The evening snapshot fits that read. Gains held, but the Nasdaq lagged the Dow and the S&P 500. Reference levels from the 19:44 UTC snapshot put the S&P 500 15.40 points above its October 27 close of 7,722.60. The Dow stood 102.43 points above 52,377.57. The Nasdaq stood 24.19 points above 26,477.81. A slip back under those October 27 closes would erase the decision-day gain in each index. Thursday's PCE and GDP prints at 12:30 GMT decide whether the December hike call hardens or softens from here.
