Investors on Wednesday got some strong earnings as well as new data showing the U.S. economy is still rocking despite uncertainty around tariffs. Wall Street didn’t seem to care. Stock futures were about flat after the government reported U.S. gross domestic product expanded at a 3% annual rate in the second quarter. That was well above the Dow Jones consensus of 2.3%. At the same time, Humana , Hershey , Kraft Heinz and Mondelez all posted better-than-expected profits since Tuesday’s close. What does that non-reaction to positive news tell me? Wall Street has its sights set on the Federal Reserve. The Fed is set to give its latest monetary policy decision at 2 p.m. And while the central bank is almost universally expected to leave its overnight lending rate unchanged at 4.25% to 4.50%, investors will still comb through the statement for clues on future policy moves. Fed Chair Jerome Powell’s news conference at 2:30 p.m. ET also adds intrigue to the meeting. As CNBC’s Jeff Cox points out in his preview, this will be the first Fed announcement since Donald Trump’s visit to the Fed’s construction site after the president raised concern over cost overruns on the project. Expect the central bank chief to field questions on that front. On top of that, the Fed has signaled concerns that Trump’s tariffs could yet drive inflation higher. “Powell has no easy job with the labor market showing some holes, though prices are still well above his sustainable 2% target and financial conditions are as easy as can be. It would suit Powell again to be non-committal ahead of the September meeting as there remains plenty of time between today and then for him to decide,” wrote Peter Boockvar, chief investment officer at One Point BFG Wealth Partners. Watch regional banks Given the anticipation heading into the Fed announcement, the broader market could see sharp moves in either direction after 2 p.m. One group to keep an eye on, according to Goldman Sachs, is regional banks. “We observe that the U.S. banking ETFs (KBE, KRE) have seen unusually large moves on FOMC-day since 2023,” wrote John Marshall, head of derivatives research at Goldman. The SPDR S & P Regional Banking ETF (KRE) has averaged a 2.5% move in either direction on Fed days over the past two years. Marshall noted the KRE could also jump after today’s decision. “Despite the rally in U.S. financial stocks since their April lows we find that regional banks continue to lag their normal relationship with macro assets. We note the 14% discount currently for the KRE ahead of FOMC,” he said.
Wall Street sets sights on Fed announcement that could jolt market
