Fed's Powell repeats no risk-free path as job, inflation risks weighed

Core Viewpoint - The U.S. Federal Reserve is facing a challenging situation with the risk of faster-than-expected inflation alongside weak job growth, raising concerns about the labor market's health [1][5][6] Economic Conditions - Powell indicated that while the economy shows resilience, the data is inconsistent and is trending towards a slowdown [4] - The job market's potential shift from a lack of hiring to layoffs is a concern, which could lead to a slowdown in consumer spending [5] Interest Rate Outlook - Powell provided little indication of when the Fed might next cut interest rates, highlighting the risks of cutting too quickly or too slowly [2] - Market participants have priced in expectations for interest rate cuts, but recent comments from Powell and other Fed officials have cast doubt on the likelihood of further cuts this year [3] Market Reactions - The S&P 500 index experienced a decline of 18.42 points, or 0.27%, closing at 6,675.44 [3] - Treasury yields decreased, with the 10-year note yield down 0.4 basis points to 4.141% and the two-year note yield down 0.2 basis points to 3.599% [3] - The dollar index initially strengthened but ultimately fell by 0.05% to 97.27 [3] Investment Considerations - The S&P 500 has seen three consecutive years of double-digit returns, but a strong catalyst is needed for further significant gains, which is currently unclear [6]