Federal Reserve's Rate Plans: Impact on the U.S. Stock Market

The upcoming Federal Reserve meeting is crucial for the U.S. stock market's rebound as investors speculate about potential interest rate cuts. With economic data fluctuating, tensions from tariffs remain a concern. Market expectations hinge on the Fed's stance, particularly amid political pressures from President Trump.

The Federal Reserve's forthcoming meeting is set to gauge the U.S. stock market's recent recovery, with investors keen on potential interest rate reductions. Stocks have rallied, reversing the downturn caused by President Trump's sweeping tariffs. The S&P 500 has notably bounced back with a 0.3% rise since April 2, despite earlier volatility.

The Fed is anticipated to maintain steady borrowing costs in its upcoming policy statement, with market bets suggesting possible cuts by June. Such prospects diminished following a robust U.S. jobs report. "The Fed holds one of the key levers to support market activity," said Dominic Pappalardo of Morningstar Wealth. Indications of easing inflation concerns could prompt rate cuts, positively impacting the market.

Tariffs remain a significant challenge for Fed officials, balancing worries of economic slowdowns with inflation risks. Recent data indicated a first-quarter economic contraction, attributed to import surges preempting tariff impacts. Although last year's rate cuts stopped at 4.25%-4.5% in 2025, future market expectations have been dampened by strong April job reports. Amid political pressures, President Trump has criticized Fed Chair Jerome Powell, raising potential threats to the Fed's autonomy. Nonetheless, discussions about firing Powell seem to have receded.

(With inputs from agencies.)