Dow Drops 1.2% as Fed Meets Wednesday | Global Economy, Oct 26

Source: market close, 23 October 2026.

01 The world in one read

Global markets enter a week dominated by three major central-bank decisions, with the US Federal Reserve up first on Wednesday. The Fed is widely expected to hold its policy rate at 3.75–4.00%, pausing after September’s quarter-point increase.

The pause masks a live December debate. Preliminary US third-quarter GDP is forecast at 3.2% annualised, nearly a full point above the second quarter, and core inflation remains stuck above 3%.

Oil offered a rare pocket of relief. Brent fell on Monday, retreating from multi-month highs, but stays well above US$100 a barrel.

Asian equities were defensive rather than panicked, with Japan’s Nikkei down about 0.8% and South Korea’s Kospi also lower. Investors are still weighing energy costs against wobbles in technology and artificial-intelligence spending.

02 The global board

The board shows a modest risk-off tilt as investors position for central-bank decisions. The Dow Jones took the heaviest hit at −1.23%, while the tech-heavy Nasdaq lost only 0.21%, suggesting the sell-off was concentrated in more traditional industrial and rate-sensitive names.

The US 10-year Treasury yield settled right at the symbolic 5% threshold, reflecting the market’s acceptance that high borrowing costs are not leaving quickly. Gold faded near the $4,000 mark, a sign that haven demand moderated as oil cooled.

03 The main event — a week of central-bank decisions

The Federal Reserve leads off on Wednesday with a hold widely priced in at 3.75–4.00%, but the decision is not the main uncertainty. The market’s real question is whether policymakers signal that September’s hike was the last or merely a pause before another move.

The European Central Bank follows on Thursday, expected to keep its deposit rate at 2.50%. The Bank of Japan rounds out the week on Friday, with investors watching for any drift toward policy normalisation.

The backdrop for all three is an economy that refuses to buckle under high rates. US growth is forecast to hit 3.2% annualised in the third quarter, and the labour market remains resilient enough to sustain wage pressure.

Oil is the wildcard. If supply fears return and energy costs climb back toward their highs, central banks will face a renewed inflation headache that could tilt the December calculus.

What Prediction Markets Say

On Polymarket, an online exchange where users trade real money on outcomes, traders price another Fed rate hike before the end of 2026 at 76.5% (US$1.07 million traded) and a Fed rate cut by the December meeting at 2.5%, as of 00:01 ET on 26 October. These prices are bets, not polls.

Why we show this: prediction markets turn real-money bets into a live probability that moves within minutes of the news, which is why investors, campaigns and newsrooms in the United States now follow them closely. We show them next to polls and official results, never instead of them.

04 Policy and data

The week’s data calendar is packed with signals that will shape the December decision. Durable goods orders for September are due on Tuesday, with the headline number forecast at 0.6% and the core measure excluding transport at 0.6%.

US consumer confidence is expected at 80.5, down from 81.9, while new home sales are seen slipping to 0.66 million. House price data will also land, with the S&P/Case-Shiller index forecast to rise 2.6% year-on-year.

Friday’s surveys set the tone. US business activity stayed strong: the S&P Global manufacturing PMI, a monthly survey of purchasing managers in which 50 separates growth from contraction, was 56.0 (forecast 55.5, previous 55.9), services 57.9 (forecast 58.0, previous 58.8) and the composite 57.6 (forecast 57.6, previous 58.4). University of Michigan consumers expect 4.7% inflation over one year (forecast 4.7%, previous 4.6%) and 3.5% over five years (forecast 3.5%, previous 3.4%).

Europe and Japan were more mixed. The euro-zone composite PMI fell to 51.9 (forecast 52.7, previous 53.1), with services at 51.7 (forecast 52.5, previous 53.0) and manufacturing at 52.4 (forecast 52.7, previous 52.9). Japan’s composite PMI held at 52.3 (forecast 51.9, previous 52.3) while manufacturing slipped to 53.3 (forecast 54.5, previous 54.1). Britain’s composite PMI rose to 53.1 (forecast 51.8, previous 52.0), services to 53.1 (forecast 51.8, previous 52.1) and manufacturing to 52.8 (forecast 51.7, previous 51.9), yet retail sales fell 0.4% (forecast −0.1%, previous +0.7%) and 0.7% excluding fuel (forecast −0.1%, previous +0.9%). Source: RT economic calendar (RT).

Core personal-consumption expenditure inflation, the Fed’s preferred gauge, prints on Thursday at an expected 3.1% year on year. That is far enough above 2% to keep policymakers from declaring the inflation battle won.

In Europe, the ECB’s hold at 2.50% on Thursday will be scrutinised for any hint that policymakers are debating a cut in 2027. For now, sticky services inflation argues for patience.

05 Commodities and currencies

Oil’s retreat from multi-month highs was the main mover in commodities. Brent slipped on Monday but stays well above US$100 a barrel.

The dollar index edged higher, supported by the view that US rates may need to stay elevated into December. The euro held near US$1.12, while the Japanese yen traded near 157 per dollar after edging higher last week.

Gold eased from the US$4,000-an-ounce threshold as the immediate haven bid faded alongside oil. Silver also dropped more than 1%, reflecting the broader pullback in precious metals.

The message from currency markets is one of patience: the dollar is not surging, but it is not weakening either, as traders wait for the Fed’s assessment of growth, inflation and December risk.

06 The Latin American read-through

The external backdrop remains challenging for Latin American economies, even as oil retreats from its highs. Brent well above US$100 a barrel keeps energy import bills elevated for countries such as Chile and Peru, while producers like Brazil and Colombia see a partial offset from export revenues.

The prospect of US rates staying higher for longer is a headwind for regional currencies and sovereign borrowers. A December hike would draw capital toward dollar assets and raise the cost of refinancing dollar-denominated debt.

Domestic policy remains the main driver for Latin American markets this week. Brazil, Mexico and Chile each have local data on the calendar that will shape investor expectations for growth and inflation.

Local data on Friday was mixed. Brazil’s mid-month inflation gauge, the IPCA-15, rose 0.32% in October against a 0.43% forecast (previous 0.70%), taking the annual rate to 4.62% (forecast 4.73%, previous 4.47%). Mexico’s economic activity indicator for August rose 0.6% on the month (forecast 0.3%) and 3.3% on the year (forecast 3.1%). Source: RT economic calendar (RT).

The takeaway for regional investors is caution, not panic. The global tone is defensive, but the absence of a sharp dollar spike or sustained oil shock leaves room for local stories to dominate individual markets.

07 What to watch

• Fed’s Wednesday statement: Any shift in language about further hikes would move global rate expectations quickly
• US third-quarter GDP: A print near 3.2% would keep December tightening firmly on the table
• Core PCE inflation: The Fed’s preferred gauge at 3.1% is the clearest signal on the December decision
• Brent crude’s next move: A rebound above US$120 would renew energy-driven inflation fears for importers

Background: Dow Falls 1.2% as AI Spending Fears Hit Tech.

Background: Nasdaq Drops 0.2% as Gold Falls and Fed Hike Looms.

Frequently Asked Questions

Will the Fed cut rates this week?

No. Markets expect the Fed to hold its benchmark range at 3.75–4.00% on Wednesday.

Why is December still uncertain?

Strong US growth and inflation above 3% keep the door open for another hike despite the pause this week.

What moved oil prices?

Brent fell on Monday, retreating from multi-month highs, but stays well above US$100 a barrel.

How does this affect Latin America?

Higher-for-longer US rates and expensive oil raise borrowing and import costs, though producers get some revenue relief.

Market data: RT

This article was produced by The Rio Times’ automated newsroom system. How we use AI · Report an error · Editorial responsibility: Matthias Camenzind, Editor-in-Chief

LatAm Markets: Live Signals → — real-time movers, turnover leaders and FX across Latin America.