While there's lots of important economic and earnings news Wednesday, we all know what matters most to the markets. That is whether the Fed cuts a quarter point or a half point from its target Fed funds rate.
Also important is what it says in its statements, including comments about inflation and growth. The news will be released at roughly 2:15 p.m. eastern time, and traders expect the markets to trade in a similar pattern to Tuesday ahead of the news.
The market has priced in a half point cut in the current 3.5 percent Fed funds target rate. If there's just a quarter point cut, traders expect to see stocks sell off in response.
"If you see 50 (basis points), it signals that the government is still very much aware of what's going on and they're being proactive, instead of reactive," said Peter Costa of Eckhart and Co.
"I think they're going to go 50 and just lay it out there," he said.
Without the Fed, Wednesday would still have been a pretty active day for the markets with lots of earnings and economic news. In the morning, advance fourth quarter GDP is released. It is expected to come in at 1.2 percent. Also important is the ADP employment report, expected at 75,000. The ADP report is being closely watched as a kind of preview of Friday's jobs report.
It does not always correlate to the jobs data, but economists pay close attention to it.
Investors will continue to watch Washington Wednesday, beyond the Fed news. The Senate should be marking up its stimulus package and there will certainly be interest in the results of the Florida primary. Also, Treasury Secretary Hank Paulson speaks at 2:30 p.m. on the economy and the fiscal growth package at the Real Estate Roundtable's State of the Industry Meeting in Washington.
It's another big day for corporate earnings. Before the bell, big Dow stocks Altria,Boeing and Merck report numbers. Food companies Kraft and Kellogg also report, as do UPS,Constellation Energy,Southern Co and Eastman Kodak. Amazon.com reports after the bell, along with Starbucks, Legg Mason, Pulte Homes and AFLAC.