The Federal Reserve is expected to hike rates again Wednesday, but the key for the market will be the central bank's hints on future policy action. Traders are pricing in a roughly 80% likelihood that the Fed will raise rates by 25 basis points, according to the CME Group's FedWatch tool. However, investors have been looking for clues on whether the central bank will pause its rate-hiking campaign after Wednesday — or if further tightening will be needed to fight inflation.
45% probability — hike and continue raising rates: JPMorgan said there's a high probability of the Fed raising and hinting at more increases given there are two consumer price index reports before the June meeting. "If the Fed does not see this trending lower over the next prints, then we may see the Fed continue to tighten," the bank's traders said. Under this scenario, the S & P 500 would fall 0.75% to 1.25%, JPMorgan said.