Fed Expected to Hold Rates Wednesday as December Hike Odds Reach 73%, Tech Earnings in Focus

The Federal Reserve is widely expected to leave interest rates unchanged at this week's meeting, with attention shifting to the Dec. 8-9 gathering where markets now price a 73% chance of a hike, according to the CME FedWatch tool. Investors see only a 10% probability of a move on Wednesday. Citigroup and Morgan Stanley economists expect the Fed to resume hiking in December absent a sharp deterioration in financial conditions. Stubborn inflation above the Fed's 2% target, an oil-price shock spreading from gasoline into the broader economy, and resilient growth all support another increase. This week's earnings from Microsoft (MSFT), Alphabet (GOOGL) and Amazon (AMZN) are critical. The Nasdaq Composite has fallen about 5% from its early-October record, and the Philadelphia Semiconductor Index is down 12% over the past month. Meta (META) shares fell Monday after announcing a $95 billion equity offering to fund AI investment. Morgan Stanley estimates market moves since September have tightened financial conditions by roughly 25 basis points. Fed Chair Kevin Warsh has declined to offer forward guidance, leaving investors to interpret conflicting official signals.