Both the S&P 500 ETF (SPY) and the Nasdaq 100 ETF (QQQ) closed in positive territory on Wednesday, as a rate cut during the September 16-17 Federal Open Market Committee (FOMC) meeting now appears to be locked in.
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The odds of a 50 bps rate cut during the FOMC meeting next month rose to 6.2%, up from 0% yesterday and 0% a week ago, according to CME’s FedWatch tool. A 25 bps reduction remains the overwhelming favorite at 93.8%. The possibility of a double rate cut jumped into play after Treasury Secretary Scott Bessent voiced his support for the measure.
“I think we could go into a series of rate cuts here, starting with a 50 basis point rate cut in September,” Bessent said in an interview with Bloomberg. He added that May and June’s downwardly revised nonfarm payroll figures could have influenced the Fed to cut rates at the July FOMC meeting if the revisions were disclosed before the meeting occurred. Bessent also said that many economic models favored rates 150 or 175 bps lower.
Countering earlier reports that he was considering 11 candidates to replace Fed Chair Jerome Powell at the end of his term in May 2026, President Trump said he had narrowed down his list to “three or four names.” He added that he may announce his pick “a little bit early” while continuing to bash Powell for failing to lower interest rates this year. Fed Governor Christopher Waller is currently the top contender to be selected by Trump before December 31, with 25% odds on prediction platform Polymarket.
Meanwhile, Trump’s summit this Friday with Russian President Vladimir Putin is just a few days away. The pair will meet one-on-one at the Joint Base Elmendorf-Richardson in Anchorage, Alaska, with Trump warning that Russia would face “very severe consequences” if it doesn’t end its war against Ukraine after the meeting. Following a meeting with European leaders, a European official said that the consequences could include secondary tariffs against Russia.
French President Emmanuel Macron added that Trump emphasized “the territorial issue relating to Ukraine cannot and will not be negotiated by anyone but the Ukrainian president.” Trump had previously floated the idea of Ukraine ceding land to Russia in order to secure a ceasefire.
The S&P 500 (SPX) closed with a 0.32% gain while the Nasdaq 100 (NDX) ticked higher by 0.04%.
