Why would the Fed cut its interest rates for the third time in a row even as stocks near records? Investors can come quickly

Are three the magic number for Wall Street? We'll find out soon. Only a few believe that Jerome Powell & Co. will not reduce rates next week for the third time in as many meetings of the interest-rate Federal Open Market Committee.

Market-based probabilities involve a 93.5% chance of a quarterly reduction in interest rates to 1.50% -1.75% from today's 1.75% -2%, following two days on October 29. -30 meeting, according to CME Group based on federal fund futures.

“It is important for the market that the Fed cut rates next week because it is as expected – e.g. over 90% probability of an interest rate cut is hinted at by the Fed Fund's futures at this time, "Chris Zaccarelli, Chief Investment Officer of the Independent Advisor Alliance, told MarketWatch in an email comment on Friday.

Fed disappointment, however, is not despite high expectations for a third cut on Wednesday, especially not as the S&P 500 index

SPX, + 0.41%

closed Friday's stock about 0.1% from its July 26 record of 3,025.86, while the Dow Jones Industrial Average

DJIA, + 0.57%

and Nasdaq Composite Index

COMP, + 0.70%

wrapped up the session within 2% of its highlights over time.

Moreover, the back-to-back rate consensus seems far from secured by a Fed that revealed its deepest divide since 2016, with Boston Fed President Eric Rosengren and Kansas City Fed President Esther George preferring to leave rates unchanged, among three members who disagreed at last month's policy meeting. And a handful of members who chose to cut last month announced that they were not keen on a new reduction.

This current round of monetary easing was described as a mid-cycle adjustment by Fed Chairman Powell earlier this year, a strategy that has been implemented lately to prevent recession and this time is used to fight the negative effects of a nasty China-U S. trade conflict.

Experts say a third cut corresponds to the definition of a mid-cycle shift and can be justified as further insurance as a recession that appears to emerge in Europe creeps up in the United States

Keith Lerner, chief marketing strategist at SunTrust Advisory Services, pointed to a trio of interest rate cuts in 1995 and 1998 as parallels to current monetary tactics.

“In fact, both 1995 (which Powell has often talked about in a favorable light) and 1998 both saw three 25 basis point shots, and then the Fed stopped; These are both largely seen as adjustments in the middle of the cycle or for insurance reasons, especially 1995, says the SunTrust strategist.

Lerner added: "To your point about the FOMC split, Powell probably won't want to put the Fed in a box."

"I suspect he will discuss that the Fed has cut prices to support the economy and now the Fed will look at the data and he can focus on the concept of & # 39; data dependent. & # 39; Monetary policy is lagging behind, and some of the recent cuts are still working into the economy, "he explained.

Still, unsuccessful deliveries will not be welcomed by investors.

" If the Fed were to disappoint the markets by not cutting next week, I think we could see a setback of anywhere from 3- 5%, but it all depends on how the Fed communicates its decision, "said the IAA's Zaccarelli.

To be sure, signs of softness (and direct weakness) in the US economy abound.

"The combination of increased trade uncertainty and smoother global growth continues to act as a powerful brake on corporate spending with core volumes of durable inventories further falling into negative territory in September," the economists wrote Lydia Boussour and Gregory Draco at Oxford Economics in a research report on Friday.

Decline in durable goods orders over the last 12 months rose to 5.4%, representing the largest annual dropout since mid-2016, reflecting an extended decline in manufacturing.

Given that, the Oxford economists believe that the Fed will not resist a desire to cut interest rates despite growing concerns about bubble formation in other parts of the financial markets.

"Despite some hint from Fed officials that it may be time to consider a policy cut, we believe the FOMC leadership retains its bias and is still attuned to the risk of an unwanted tightening in economic conditions,"

Jobs, jobs, jobs … and a flood of other data

It's not just about the Fed next week either. Undoubtedly, an even more significant update will be Friday's work report to be launched on November 1st. Economists expect 93,000 jobs were created in October, against a disappointing 136,000 increase in September, reflecting wage growth and the effects of strikes at General Motors Co.

GM, + 2.57% ,

according to Econoday data. Consensus estimates place unemployment at 3.6%, up from 3.5% last month.

This is how the rest of the week looks on the data front (in bold):

Monday:

• International trade in goods at. 08:30 Eastern Time as well as the Chicago Fed National Activity Index, and retail stocks at the same time
• Dallas Fed Manufacturing Survey

Tuesday

• Case-Shiller Home Price Index at 9 am
• Consumer confidence at 10 am, along with pending home sales at the same time

Wednesday

• ADP private sector employment at 8:15 am
• GDP report at 8:30 am
• 2 p.m. Fed Decision followed by 14:30 news conference

Thursday

• A report on weekly unemployment requirements, a reading of personal income and employment costs at. 08.30
• Chicago PMI at. 9.45am

Friday

• NFP at. 8: 30 (as mentioned above)
• ISM production at. 10, after the IHS Markit report at. 09.45
• A report on construction costs at 10

High corporate revenue highlights [19659023] Monday

• AT&T Inc.

  T, + 0.24%

• Walgreens Boots Alliance Inc.

  WBA, + 1.78%

• Beyond Meat Inc.

  BYND, -0.88%

• Google Parents Alphabet

  GOOG, + 0.33%

  GOOGL, + 0.41%

• T-Mobile US Inc.

  TMUS, + 0.17%

Tuesday

• Pfizer

  PFE, + 1.04%

• Merck

  MRK, -0.39%

• Mastercard

  MA, + 0.54%

• Citigroup

  AAPL, + 1.23%

Wednesday

• Apple

  AAPL, + 1.23%

• Genera Electric

  GE, + 0.56%

• Facebook Inc.

  FB, + 0.81%

• Starbucks

  SBUX, + 0.24%

Thursday

• Bristol-Myers Squibb Co.

  BMY, + 1.12%

• Kraft Heinz Co.

  KHC, -0.25%

• Altria Group Inc.

  MO, -0.34%

Friday

• Exxon Mobil

  XOM, + 0.23%

• Chevron Corp.

  CVX, + 0.93%

• Seagate Technology PLC

  STX, + 1.20%

• Colgate-Palmolive Co.

  CL, + 0.10%

• American International Group Inc.

  AIG, -0.19%