Stocks Up Ahead Of Wednesday's FOMC Announcement On Rates  Image: Bigstock Stocks finished higher yesterday as investors prep for Wednesday's Fed announcement on rates. As it stands now, the Fed is expected to raise rates by 75 basis points. (Although, there is about a 25% chance that they go a full 100 bps. But the overwhelming odds are for 75 bps.) But the real question on everyone's mind is how high will the Fed go before they hit their target rate? At the moment, the midpoint for the Fed Funds rate is at 2.38%. If the Fed raises rates by 75 bps, as expected, that would put the midpoint at 3.13%. Previously, the Fed has said they see the target rate getting to 3-3.5% by year's end, while other members recently said they see it getting above 4% by early next year. After this week's FOMC meeting, there's another one in November, then December, and then the first one in 2023 is February. In the meantime, all eyes and ears will be on the Fed on Wednesday. In other news, the Housing Market Index slipped to 46 yesterday from last month's 49 and views for 48. We'll get another look at the real estate market today with the Housing Starts and Permits report. (And then again tomorrow with MBA Mortgage Applications and the Existing Home Sales report.) Assuming there are no shocks from the Fed on Wednesday, the market could be primed for a rebound. High inflation is worse for the economy than higher interest rates. So if the Fed remains aggressive, but they stay on their measured, well telegraphed pace, it should be interpreted bullishly for the market. Of course, what should happen and what could happen can be very different things at times. Nonetheless, with inflation remaining below its summer highs (not by much, but lower nonetheless), and with jobs, consumer spending, and earnings, in aggregate, still robust, there's plenty of reason to expect higher prices to come. See you tomorrow,  Kevin Matras
Executive Vice President, Zacks Investment Research | 
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