CNBC host Jim Cramer posted “OMG Interest rates can fall, too!!” on X on Oct. 6. His statement coincides with CME FedWatch Tool data showing a 21.6% probability of a Federal Reserve interest rate hike at the upcoming Oct. 28 meeting. However, futures traders currently price in a 78.4% probability that the central bank will keep its target interest rate unchanged.
Impact of September Rate Increase
The shift in October probabilities follows the Federal Reserve’s decision on Sept. 16 to raise its benchmark target range by a quarter percentage point to 3.75%–4.00%. The action marked the central bank’s first rate increase since 2023.
Federal Reserve officials stated that the move supported a timelier return to its 2% inflation target, following August Personal Consumption Expenditures inflation figures of 3.4%.
Higher borrowing costs continue weighing on rate-sensitive corporate shares and fixed-income markets. Home Depot Inc. (NYSE:HD) shares fell by 6.52% between Sept. 16 and Oct. 1, bringing the retailer’s overall losses to 18.29% since the start of 2026.
In the bond market, the 10-year Treasury yield closed near 5.24% on Oct. 1, up from approximately 4.16% at the beginning of 2026. Cramer noted during a quarter-end review on CNBC, “My big fear right now is the impact of higher interest rates on the stock market.”
Higher Probabilities for December and January
Despite the increased likelihood of an October pause, futures pricing indicates elevated expectations for rate hikes later in the cycle. CME FedWatch data for the December 9 meeting shows an 86.2% probability of a rate hike and a 13.8% probability of no change.
For the January 27, 2027 meeting, the probability of a hike climbs to 92.2%, while the probability of no change drops to 7.8%. Across the October, December, and January meetings, CME FedWatch data reflects a 0.0% probability of a rate ease.
How Has the Stock Market Performed in 2026?
The S&P 500 index has advanced 13.35% year-to-date. Similarly, the Nasdaq Composite index was up 18.26%, and the Dow Jones gained 5.96% YTD.
On Monday, the SPDR S&P 500 ETF Trust (NYSE:SPY) and Invesco QQQ Trust ETF (NASDAQ:QQQ), which track the S&P 500 and Nasdaq-100, respectively, closed higher. SPY rose 0.67% to $774.83, while QQQ rose 0.88% to $756.20. Meanwhile, the Dow tracker, State Street SPDR Dow Jones Industrial Average ETF Trust (NYSE:DIA), ended 0.20% higher at $512.11.
In premarket trading on Tuesday, SPY was up 0.21%, QQQ advanced 0.33%, and DIA rose 0.40%.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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