The terror attacks on Paris are not likely to be a catalyst that would deter the Fed from raising interest rates, unless they lead to more extreme uncertainty and financial conditions deteriorate significantly.
The stock market traded higher Monday morning amid speculation the Fed could delay hiking rates because of volatile markets or economic weakness. The futures market, however, continued to place high odds of a December rate hike, at around 65 percent.
Stocks stabilized Monday after S&P 500 futures initially plunged Sunday night. The so-called Islamic State has claimed responsibility for the Paris attacks as well as recent bombings in Beirut and the downing of the Russian passenger plane in Egypt.
"It's something that really has to cause uncertainty in the U.S., such that it causes business and consumers to shut down, not take on risk and spend little," said Chris Rupkey, chief financial economist at Bank of Tokyo Mitsubishi. Rupkey said a major military response to the attacks could sway the Fed.