The S&P 500 closed out the third week of September 2018 on an upnote, but not by so much that it resumed setting the kind of new record highs that it was just a few weeks ago.

The following chart shows the latest update to our spaghetti forecast chart for the trajectory of the S&P 500, where we find that investors would appear to be currently splitting their forward-looking attention between the future quarters of 2018-Q4 and 2019-Q1, with a somewhat heavier focus on 2019-Q1.

(Click on image to enlarge)

As for why investors would appear to be looking at these two future quarters in particular, we suspect that it has a lot to do with the Federal Reserve's plans for changing its Federal Funds Rate (FFR), the interest rate that banks pay for borrowing money from the Fed, which sets the floor for short term interest rates in the United States. When we last reported upon investor expectations for the future for the FFR just over a month ago, investors were anticipating that the Fed would hike that rate by a quarter point twice more in 2018, in both September and December, then take a breather until June 2019 before doing it again.

Since then, the combination of reports of continued strength in the U.S. economy with multiple statements by the Fed's minions in recent weeks is giving investors reason to anticipate that there will be no breather in the Fed's latest series of short term interest rate hikes. The following table indicates what the CME Group's FedWatch tool anticipates for the future of the Federal Funds Rate based on information from the FFR futures market.

The table confirms that investors are now anticipating quarter point rate hikes in September 2018 and December 2018. In addition, as of the last week, investors are now also given just over a 50% probability that the Fed will again hike interest rates by another quarter point or more in March 2019 (as can be determined by adding the probabilities in the table cells highlighted in yellow for the Fed's March 2019 meeting).

That assessment isn't just based on this data. It's also based in part from the news reports we reviewed during the third week of September 2018, where the following stories appeared noteworthy in describing the noise in the market.

Monday, 10 September 2018

• Oil steadies as U.S. inventory concerns curb gains
• S&P, Nasdaq edge higher after recent losses but Apple drags
  • Earlier headline: US STOCKS-S&P, Nasdaq edge higher on tax optimism despite Apple drag

Tuesday, 11 September 2018

• Oil rises as U.S. sanctions on Iran squeeze supply
• Wall Street gains as Apple, tech rebound; oil lifts energy shares

Wednesday, 12 September 2018

• Brent reaches $80 a barrel after fall in U.S. crude stocks
• Trump 'definitely' boosted U.S. growth, Fed's Bullard says
  • Fed has room to raise interest rates for some time, Brainard says
  • Fed says it whipped U.S. unemployment, maybe too well
• Dow, S&P 500 end up slightly after trade talk news; Apple slips
  • China welcomes U.S. invitation for trade talks

Thursday, 13 September 2018

• Oil has steepest drop in a month as economic concerns threaten demand
• House panel backs bill to make Trump tax cuts permanent
  • Impact of U.S. tax reform may last longer than expected: Fed's Bostic
• Atlanta Fed's Bostic: Rate hikes can continue for several more quarters
  • Fed's Bostic says taking 'wait and see' attitude toward fourth 2018 rate hike
• Wall Street rises with Apple, easing trade concerns

Friday, 14 September 2018

• Oil mixed as China tariff talk scotches early rally
• Trump readies tariffs on $200 billion more Chinese goods despite talks: source
• Fed policy to turn mildly restrictive in 2019, Evans says
  • Fed's Evans says premature to read much into yield curve
  • Fed's Evans sees one or two more rate hikes this year
  • Yellen: Fed should commit to future 'booms' to make up for major busts
• Wall Street flat as looming tariffs offset gains in financials