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Fed may edge closer to rate hike

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The Fed could sound slightly more upbeat about the economy after its meeting Wednesday, and that could be enough to reinforce Wall Street's growing view that a rate hike is coming in December.

What the market is hoping to hear in the Fed's post-meeting statement Wednesday is how it now views Brexit and its impact on the world economy. The U.K. economy has already shown some signs of strain following the June 23 vote to exit the European Union, but U.S. data has only gotten stronger.

That's important since Fed officials cited Brexit as one of the reasons why they did not hike interest rates in June, along with the surprising weakness in May's jobs report. The jobs market has since bounced back with June's 287,000 nonfarm payrolls.

"We've got record levels of equities. We have volatility that's settled down. There's not much concern about contagion through financial institutions. The 10-year Treasury has backed up a bit. There seems to be a settling comfort that while conditions in the U.K. are not normal, it's not likely to produce much carryover here. That has the potential to influence the timing of the next Fed move. A lot of us are looking for any diagnosis of that situation," said Carl Tannenbaum, chief economist at Northern Trust.