Federal Reserve's Hawkish Stance Threatens Stock Market Rally

The Federal Reserve is expected to skip a rate hike this week but signal their intent to hike again, potentially capping the upside for stocks. The Fed will likely adjust its policy statement, new economic projections, and Chairman Jerome Powell's post-meeting news conference to signal the end of the pause in rate hikes. Deutsche Bank economists predict one further quarter-point hike to a range of 5.25% to 5.5% at the July 26 meeting. The S&P 500 is likely to behave better if the new projections show the Fed is closely divided over an additional hike.