Huge day. Easily 500 points in either direction on the line.
So, let's go over the stakes and the possibilities.
First, the Fed could hike the Fed funds rate and stick by its assertion that it still has more to do, because of wage inflation and full employment. That's disastrous -- and the bear would go on a rampage as surely as if the bulls had honey smeared all over their faces.
Second, the Fed could hike and then say it wants to wait to see what the hikes have done. It also can cite the collapse in oil -- down a gigantic near $4 on Wednesday -- as a reason to be on hold. Is oil going down because the economy is collapsing? It is sure worth finding out before more braking of the economy. This rationality would be viewed as good news, especially because it would indicate that the Fed is off the nonsensical and dangerous autopilot, an autopilot that would be set for a crash landing.
Third, it can simply say that it isn't going to hike yet because its work is done for the moment and the economy is slowing, in part because of fears that short rates are going to go up more than long rates -- that inverted yield curve that often points to a recession -- and in part because of the president's policy on tariffs.
Wow, the last would be an out, a way for the Fed to maintain its independence from the president by blasting the heck out of him for slowing the economy, himself. I know it's tough, as the market's slide began when Jay Powell decided to go all-in against inflation at the beginning of October. I would be concerned that something worse is afoot, but I know many bulls would be appeased.
I think that no matter what, you have to accept that our volatility will be so erratic today that you could even get 500 in both directions.
But if it is 500 points up, I would actually hold on for a second day move, for those who didn't catch this one.