Fed Rate Decision: Wall Street Waits as Stocks Hover Near Record Highs

U.S. stocks held close to record levels on Wednesday morning as investors waited for the Federal Reserve’s latest rate decision. The main keyword, Fed rate decision, has dominated market sentiment this week as Wall Street anticipates another interest rate cut.

The S&P 500 rose 0.3% in early trading, while the Dow Jones Industrial Average climbed 193 points, or 0.4%. The Nasdaq composite advanced 0.7%, all three indexes staying near their all-time highs. The market’s attention is fixed on whether the Fed signals additional rate cuts in December.

Fed Rate Decision and Market Expectations

The widespread expectation among analysts is that the Federal Reserve will announce its second rate cut of 2025 later today. The central bank aims to support a cooling labor market while maintaining control over inflation, which remains above its 2% target. Traders are watching closely for language indicating whether policymakers plan to continue easing monetary policy.

Markets have rallied this year largely on hopes of lower borrowing costs. A steady decline in rates makes equities appear more attractive compared to bonds. However, Fed officials have cautioned that if inflation trends higher again, rate cuts could pause or even reverse. The uncertainty has left investors weighing short-term optimism against long-term inflation risks.

Complicating matters further, a partial U.S. government shutdown has delayed key economic data releases. Those missing reports typically guide the Fed’s decisions, forcing officials to rely on incomplete information this time around.

Corporate Earnings Lift Wall Street Optimism

Despite the policy uncertainty, corporate earnings have provided some relief. Caterpillar shares surged 9.3% after beating quarterly profit and revenue forecasts. CEO Joe Creed said the company benefited from “resilient demand” even in a “dynamic environment.”

CVS Health rose 3.1% after stronger-than-expected results and progress stabilizing operations. Meanwhile, Teradyne soared 19% on robust demand for artificial intelligence–related testing systems, with CEO Greg Smith noting that “AI-related test demand remains robust.”

Nvidia led the broader market higher, jumping 4.9% to reach a $5 trillion valuation — a historic milestone achieved just three months after it hit $4 trillion. The company’s dominance in AI chips continues to power the tech rally. These gains offset a 3.3% drop in Mondelez International shares, which slipped amid concerns over record-high cocoa prices despite strong financial results.

Traders Steve Capo, left, and Chris Morie work on the floor of the New York Stock Exchange, Monday, Oct. 27, 2025. (AP Photo/Richard Drew) © The Associated Press

Global Markets React Ahead of Fed Decision

Overseas markets were mixed. Tokyo’s Nikkei 225 climbed 2.2% to another record, and South Korea’s Kospi gained 1.8% following former U.S. President Donald Trump’s meetings with Asian leaders. Shanghai’s benchmark index added 0.7% ahead of Trump’s expected talks with Chinese President Xi Jinping on trade and technology restrictions.

In the bond market, the yield on the 10-year U.S. Treasury slipped slightly to 3.98% from 3.99%, suggesting cautious optimism ahead of the Fed’s announcement. Lower yields typically signal investor expectations for future rate cuts or slower economic growth.

As the countdown to the Fed’s decision continues, investors remain on edge. The outcome will shape not only the next few weeks of market trading but potentially the entire trajectory of 2025’s economic outlook.

FYI (keeping you in the loop)-

Q1: What is the Fed rate decision expected today?

The Fed is expected to announce its second interest rate cut of the year to support the slowing job market.

Q2: Why are markets focused on the Fed rate decision?

Rate cuts affect borrowing costs, stock valuations, and investor sentiment, making the decision crucial for market direction.

Q3: Which stocks benefited ahead of the Fed meeting?

Nvidia, Caterpillar, CVS Health, and Teradyne all saw significant gains due to strong earnings reports.

Q4: How is inflation influencing the Fed’s moves?

High inflation limits how aggressively the Fed can cut rates, as lower rates could fuel further price increases.

Q5: What’s next for global markets?

Global markets are awaiting both the Fed’s guidance and the outcome of Trump’s meetings with Asian leaders on trade.

References

Associated Press. (2025). “U.S. stocks hold near records as Wall Street awaits Fed decision.” Oct. 29, 2025.

Reuters. (2025). “Wall Street edges higher ahead of Fed rate decision.” Oct. 29, 2025.

BBC News. (2025). “Global markets mixed as investors await Fed interest rate update.” Oct. 29, 2025.