The Fed holds its regular, one-day meeting Tuesday and is expected, as always, to release a statement at around 2:15 p.m. But what it will say in that statement is at the heart of a debate among Wall Street's deeply divided economists over what steps, if any, the Fed will take. One view is that the Fed will embark on a new quantitative easing program, by reinvesting the proceeds of its maturing mortgage securities in Treasuries, or even more mortgages. Another group does not think the Fed would make such a move unless the economy significantly worsens later on. Yet, they all agree the Fed could give a nod to a weakening economy.
"That's the only story tomorrow," said Knight Equities managing director Peter Kenny of the Fed meeting.
"Earnings season" is winding down, and now the focus is going to revert back to the economy and frankly that's not particularly good," said Kenny. There are a few pieces of economic news ahead of the Fed meeting, including the NFIB small business survey at 7:30 a.m.; productivity and costs, at 8:30 a.m., and wholesale trade at 10 a.m.