The Fed's rate decision and May inflation data will be key tests for the stock market next week

The next rate decision from the Federal Reserve coupled with May inflation data, both on Wednesday, will play key roles in how stocks perform next week — quite probably lending added volatility to an already jittery market. Stocks look poised to cap off the first winning week of June on a positive note, with Nvidia powering the market to new highs to briefly break above a $3 trillion market capitalization and temporarily unseat Apple as the second most valuable company after Microsoft.

Trading in fed funds futures are now pricing in a 54% chance of a cut in September and nearly 90% odds of easing in December, according to the CME Group's FedWatch too l. Any inkling next week that a rate cut could come earlier – such as September – will prove a dovish signal to the market, said Envestnet's Dana D'Auria.

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