According to data gathered by Citibank, the SP 500 is likely to move by nearly 1% today after the Federal Reserve announces its policy decisions today.

The Fed and its chair Jerome Powell are likely to drop important hints on the path ahead for monetary policies.

Current changes in the options market indicate predictions of a big swing in the SP 500 today, with the previous similar big prediction in the options market happening in May 2023, on the same day as the Feds policy meeting back then.

The traders are estimating the biggest swing in US stocks value today in months, despite successive days of mixed earnings results and geopolitical uncertainty in recent weeks.

The markets are also concerned about the Federal Reserves maintenance of current interest rates unchanged for an extended duration to control inflation.

Hefty Monthly Loss

The SP 500 lost 4.2% in April, the first monthly loss in half a year, and the largest since September 2023.

The losses came after strong US data and bullish remarks by Fed officials, which hurt the odds of early Fed interest rate cuts this year.

Now investors barely expect one interest rate cut this year, down from three in previous forecasts.

The Feds Day

Citigroups strategists said that options traders have continued to underestimate the size of swings experienced by the SP 500 on the Federal Reserves day for the past two years, which means the actual movement could surpass the 1% mark.