Do investors need to protect themselves in case the Fed gets less "patient?"
The much-awaited Federal Reserve meeting begins on Tuesday, and the Federal Open Market Committee statement will release its latest policy statement on Wednesday. All eyes will be on one word—"patient," as in this sentence from the Fed's January statement: "Based on its current assessment, the Committee judges that it can be patient in beginning to normalize the stance of monetary policy."
If the word goes, then the Fed would be open to raising rates within two meetings, as chair Janet Yellen informed her congressional inquisitors in late February.
But a funny thing has happened on the way to the feared major market slide: Stocks digested the potential for a less "patient" statement in stride.
"What I'm getting really impatient with is the fact that everybody's talking about the word 'patient,'" said David Seaburg, head of equity sales trading with Cowen & Co. "Everybody expects it. The market's pricing it in. So near-term, no move" should be expected off of a change to the statement.
The options market is pricing in a move of 1.7 percent for the S&P between Monday afternoon and Friday's close, said Stacey Gilbert, head of derivative strategy with Susquehanna International Group.
"That's not unusual for a Fed week. So in general, there's no extra significant volatility being priced in, as if the Fed's going to say something that's really going to weigh on these markets," Gilbert said.
In early Tuesday trading, S&P futures gave back some of Monday's impressive gains, but still traded nicely above the lows hit on Friday.