Powell’s Remarks Shake December Rate Cut Expectations

The S&P 500 finished the day unchanged, even though the Fed cut rates by 25 basis points. Anxiety appears to be building that the Fed may not actually cut rates in December, after the FOMC chairman Jay Powell pushed back against the idea that anything is a foregone conclusion. This made the market somewhat wary, as another 25-basis-point rate cut had already been priced in. In fact, the odds of a December rate cut have now slipped to 67% from 90% prior to the FOMC announcement.

In response to the more hawkish stance, the dollar strengthened materially, while 10-year yields rose by almost 10 bps and returned to above 4%. The front end of the curve rose even more, with the 2-year yield climbing by 11 basis points on the day to 3.6%, leading to yield curve flattening. Additionally, commodities such as gold fell sharply after rising by more than 1% earlier in the day, to finish lower.

S&P 500 Still Vulnerable

Even though the S&P 500 finished the day flat, it remains overbought, with the index sitting just above the upper Bollinger Band and an RSI around 69. This suggests the index could either trade sideways or decline back to the 20-day moving average for starters. One thing to consider is that implied volatility levels on 29 October, at least as measured by the VIX 1-Day, closed at elevated levels around 15. This could indicate that the market may hold up somewhat better in the trading session on 30 October, despite some negative earnings and after-hours news from companies such as Meta and Microsoft, or at least until volatility comes down and resets.

(Source: TradingView)
(Past performance is not a reliable indicator of future results)

Meta Drops Sharply

Meta shares were down more than 8% after hours following the company’s third-quarter results. More importantly, the company appears to be on a spending spree and has indicated that it plans to spend even more in 2026 than it has this year, which seems to be unsettling the market, at least initially. With the decline, Meta is currently hovering near its put wall at around $680, which may provide some stability for the stock. However, if the put wall fails and the shares close below $680 on 30 October, it could break the neckline and confirm a double top pattern. This could lead to the stock falling towards $640, or potentially lower.

(Source: TradingView)
(Past performance is not a reliable indicator of future results)

Gold Reverses Early Gains

Gold prices reversed early gains, falling sharply following the Fed’s announcement today. The precious metal finished the day lower after having risen by more than 1% earlier. Prices reached around $4,050, which now appears to be acting as a resistance zone near the 10-day exponential moving average, which is trending lower — a negative development for gold. Additionally, the RSI continues to trend lower, suggesting that momentum is fading. It still appears likely that gold’s next target could be around $3,800 in the short term, which aligns with the lower Bollinger Band and the support at that level.

(Source: TradingView)
(Past performance is not a reliable indicator of future results)

What may further add to gold’s struggles is the prospect of rising interest rates, as the market now appears to be anticipating fewer rate cuts from the Fed following today’s press conference. The 10-year yield appears to have broken out of a falling wedge pattern earlier in October and surged back above 4% today. It is now approaching resistance around 4.1%, and a breakout above that rate could see the 10-year move towards 4.25%. Additionally, the RSI has begun to show signs of a bullish divergence, forming a series of higher lows while the yield made lower lows — potentially signalling a developing trend reversal that could push the 10-year yield higher from current levels.

(Source: TradingView)
(Past performance is not a reliable indicator of future results)