The Fed gives money to banks all over the world. So maybe they are not in today but their partners in crime are. Individual stocks get hammered with bad earnings, bots buy the indexes and shazaam the bad reporters are driven right back up.
HUH?? The Fed isn't a hedge fund or an investment bank. It doesn't try to make money by trading.
The Fed's involvement is to artificially prop up the market by conditionally handing out free money to institutions in exchange for a commitment to pump up stock values (definitely) and by buying index futures (probably). The Fed doesn't short. If the Fed decided that it wants to let the market pull back so the government can get a higher rate for treasury bonds, all it would have to do is step out of the way. And unload index futures, if it has been buying them.