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These 4 words from the Fed could be key for stocks

While Wall Street certainly expects the Federal Reserve to announce the historic final taper of quantitative easing on Wednesday, the real action for investors may lie in the fine print.

Chris Rupkey, chief economist at Bank of Tokyo-Mitsubishi UFJ, told CNBC's "Squawk Box" that a key to the future direction of financial markets comes down to four words in the statement the Fed releases Wednesday afternoon after its two-day meeting.

Read MoreMarkets could shrug off Fed if it sounds dovish

"Significant slack." Rupkey said any modification to that phrase in the policy statement as it pertains to the job market would be big news. "There's a tremendous battle over whether the economy is nearing full employment."

He also cited "considerable time," another Fed favorite in describing when it might start considering an interest rate hike following the end of QE. The last time the Fed modified that phrase in 2004, he said, the central bank "hiked rates five months later."

The general consensus among economists puts the first rate hike around summer. Jason Pride, director of investment strategy at Glenmede, expects it to be later, around October.

But he said higher rates don't have to spell doom for investors. "Markets going into the first rate hike tend to be moving in the tune of 17 percent per year to the upside. After the first rate hike they tend to be moving in the tune of 6 percent per year."

"The market wants to progress back to normal that's very measured and slow," Pride added.

Jurrien Timmer, director of global macro analysis at Fidelity Investments, expects the Fed to end QE. But he said if stocks did not mount a comeback this month, it might have been a different story. "If the markets were still at their lows from a few weeks ago there was some talk about delaying the final taper until December."

With two trading days left in this volatile October, the Dow Jones Industrial Average stood above 17,000 again and just 37 points from a breakeven month. The S&P 500 and the Nasdaq have already turned positive for the month.

While the Fed's bond-buying has been widely cited as a positive for stocks, Michael Cloherty, head of U.S. rate strategy at RBC Capital Markets, said that if policymakers defied expectations and decided not to end QE the market could take a hit. "If we did get any extension to taper, it would spook everybody. Everybody would think there's a skeleton in the closet that's about to pop out. It would be much worse than helpful."

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Even if QE3 ends Wednesday, the Fed still has it as a tool in the future. But Tom Fanning, deputy chair of the Atlanta Fed, said, "The real arrow in the quiver is getting the economy moving."

On interest rates, Fanning, also chairman and CEO at Southern Company, predicted: "My sense is they [the Fed] are likely to keep interest rates lower for a longer time."

The key for Fed policymakers will be tying interest rates to inflation targets, said Krishna Guha, head of global policy at ISI group and former executive vice president at the New York Fed. "I do think the committee will be looking at ways to try to tighten the link between the path of interest rates going forward and the outlook for inflation."

While this may not happen after this meeting, he said, "they aren't going to start tightening rates until they're reasonably confident that inflation is heading back to 2 percent in a reasonably timely matter."

Read MoreAs QE3 fades, Wall Street already thinking about QE4

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