Inflation Fight: Fed Holds Rates at 3.75% as Hike Odds Stay High

More than 80% of market participants believe the Federal Reserve will raise interest rates in December, a probability that remained steady before and after the central bank's latest announcement.

The Fed concluded its two-day meeting on Wednesday by keeping the target range for short-term rates at 3.75% to 4%. The policy statement noted that inflation remains elevated, though the committee indicated it needs more data before taking additional action. Two members dissented from the decision, arguing for an immediate rate increase. This follows the Fed's decision to raise the overnight lending rate in September, marking the first such move in three years.

During his post-meeting news conference, Fed Chairman Kevin Warsh emphasized that the central bank's inflation target is strictly 2%. "There is no soft inflation target," Warsh said. He also announced that the Fed plans to reduce the number of rate-setting meetings in coming years.

Stock prices were largely flat on Wednesday, sitting slightly below their levels from before the Fed announcement. Meanwhile, memory and storage stocks experienced a sharp rally following a strong earnings report from SK Hynix. The South Korean company reported soaring quarterly revenue and operating profit, along with larger capital return plans. Management stated that demand for memory chips is expected to continue outpacing supply.

SK Hynix shares trading in the United States rose more than 12.5%. Its U.S. rival, Micron, gained nearly 6%, extending its winning streak to four consecutive sessions. Although Micron stock is about 19% below its record high close of $1,213 set in June, it remains up 240% year to date.

Apple released its first touchscreen laptop on Wednesday, a product shift that reverses years of company statements against the design. The new touchscreen MacBook Pro models launch at a starting price of $2,899, which is higher than the new non-touchscreen MacBook Pro 14-inch with the M6 chip, which starts at $1,999. This is the third major product launch since John Ternus became CEO on September 1.

A busy earnings calendar continues on Thursday with results from Alphabet, Microsoft, and FedEx. Other companies reporting include Ford, T-Mobile, Carvana, Honeywell Aerospace, MGM Resorts, ServiceNow, eBay, Chipotle, and Fortinet. Before the market opens, Eli Lilly and Linde will release their quarterly results, followed by Caterpillar, Merck, and Bristol Myers. Investors also await the September PCE price index and the first estimate of third-quarter GDP on Thursday morning.