"I don't think the Fed does anything this month. I think they see enough jitters. They're not going to do anything," said Richard Bernstein, CEO of Richard Bernstein Advisors.
Some Fed watchers though say the Fed's statement could contain a new nugget in that the FOMC is considering a hike at its "next meeting," given the right circumstances. It used similar language last fall to signal a rate hike in December, the first in nine years. But this time around, an antsy market may worry about the Fed raising rates as it worries about the period of uncertainty it is facing around the election.
"We do not think they have to change the statement in any meaningful way. If there is a change, it will most likely be to the hawkish side and hint that the Fed is on track to follow through with their rate hike in December," said Ian Lyngen, head of rates strategy at BMO. "We don't think they'll actually say 'next meeting,' but that's the risk."
Michelle Meyer, Bank of America Merrill Lynch senior U.S. economist, said the Fed could strengthen some of the language such as by saying they think risks are balanced, and they could say the case for a rate hike is 'further' strengthened. That would emphasize that the case to hike is more compelling.
"We're assuming the Fed makes some tweaks to the language but does not explicitly put the form of a calendar guidance into it," she said. "I don't think they need to. If you look last year at this time, the market was only pricing in a 37 percent chance of a hike in December. It seems like there was a need to be more explicit." Now futures markets put odds at more than 70 percent chance.
The Fed began its two-day meeting as the market began to react negatively to the possibility that Republican Donald Trump could win the presidential election. Trump is less appealing to Wall Street because of his unpredictability and his position on trade, but Democrat Hillary Clinton remains embroiled in the FBI email investigation and her lead could narrow. The market had long been comfortable with the view that Clinton would win, Republicans would hold Congress and there would be gridlock. With Trump, he has a more market-friendly tax plan but he also wants to load up on debt and his volatility is a concern.
Traders were spooked Tuesday after the Washington Post-ABC News tracking poll showed Trump pull ahead of Clinton by 1 percent in a four-way contest. The market sold off in a decline that picked up momentum as the day went on. The bond market, in its own sell-off earlier in the day, reversed course and yields moved lower. Traders said there was an allocation trade that sent money into bonds and out of equities.
The S&P 500 fell 14 points to 2,111, breaking through key support below 2,120. But it did touch 2,097, a level that would have signaled more selling ahead if broken.
"I think the Fed is a minuscule part of it. You can see that yields came in a little bit. I think it's mostly Trump. It's a serious re-pricing," said Art Cashin, director of floor operations at UBS. Election jitters could keep impacting the market. "It depends on what comes out. You're looking at seven days of hand grenades. It depends who's throwing them."
Art Hogan, chief market strategist at Wunderlich Securities, said the market is wary of the Fed, even though it is widely expected to raise rates.
"This is just the agita that happens around a Fed rate hike, and since we only do it once a year, people get nervous about it," he said. "The meeting is going to come and go and we're going to have the same hawkish message we had at the September meeting."
The idea of a rate hike worries markets because there are other uncertainties, like the election and the economy. The economy has been sending mixed signals but there have been some improving signs, such as a better growth rate with GDP at nearly 3 percent in the third quarter. October ISM manufacturing rose to 51.9 in from 51.5 in September. Auto sales Tuesday were also much stronger, with an annualized selling rate of more than 18 million.
Besides the Fed, there is ADP payroll data at 8:15 a.m. EDT. Meyer said she is expecting 170,000 jobs, about the same as nonfarm payrolls expected in Friday's October employment report.
Oil could also be important Wednesday, with inventory data released at 10:30 a.m. American Petroleum Institute data showed a large build in supplies. API showed a build of 9.3 million barrels in crude and a drop in gasoline of 3.6 million barrels.
Earnings are expected from Alibaba, Time Warner, Anthem, Clorox, TransCanada, Delphi Automotive, Estee Lauder, Kate Spade, NY Times and Zoetis. Facebook, AIG, 21st Century Fox, IAC/InterActive, Wynn Resorts, GoDaddy, Whole Foods, Qualcomm, Fitbit and MetLife report after the closing bell.