The Federal Reserve is scheduled to release its interest rate decision at 2:00 a.m. Beijing time on Thursday, and Fed Chair Powell will, as usual, hold a press conference at 2:30 a.m.

Facing what the industry currently calls the most difficult-to-predict Fed decision, JPMorgan Chase’s U.S. Markets Information and Trading Desk, in its latest research report, expects the Fed to keep rates unchanged, while also seeing at least two hawkish dissenting votes—these include objections from Hammack and Logan.
The Lighthouse lays out five scenario forecasts for the Fed’s decision and the potential path of the S&P 500 index (ranked by probability from high to low):
① The Fed keeps rates unchanged while taking a hawkish stance (probability 50%)—the S&P 500’s trading range for today is up 0.25% to down 0.5%. This is the current baseline forecast: the Fed will keep rates unchanged based on strong labor market/economic growth, but will remain alert to inflation—recent energy price trends suggest another round of inflation may be about to arrive.
② The Fed keeps rates unchanged while taking a dovish stance (probability 28%)—the S&P 500 is expected to rise 0.5%-1%. This is the most favorable outcome for stocks.
③ The Fed raises rates by 25 basis points (probability 20%)—the S&P 500 is expected to fall 1.5%-2%, and the Nasdaq 100’s decline could double again. With the market shifting toward avoiding momentum stocks and AI-related stocks, the Russell 2000 may perform relatively better in this pullback.
④ The Fed raises rates by 50 basis points (probability 1%)—the S&P 500 falls 2%-4%. If the Fed also releases information indicating this rate hike is only a temporary measure to address traditional inflation indicators and should not be interpreted as the start of a series of hikes, the downside could be limited.
⑤ The Fed cuts rates (probability 1%)—the S&P 500’s trading range is up 1% to down 1.5%. The reason stocks could have a negative outcome is: if the market views this as a sign that the Fed has lost independence, it would lead to rising yields, a higher breakeven inflation rate, higher volatility, and weaker equities.