Equity markets were fairly steady on Tuesday ahead of the FOMC policy announcement. The Fed isn't expected to alter policy today when it makes the announcement, but it is expected to sound hawkish. The combination of accelerating inflation and rising oil prices poses a risk for the economy that it can not let stand. Based on the data, the FOMC will likely indicate at least 1 more hike is coming this year and leave the door open to 2 or more by early 2024.
The question for investors is what to expect from the rest of the year. The economy continues to show momentum, and the consumer remains resilient, so the S&P 500 will likely return to earnings growth by year-end. The caveat is that the growth outlook continues to be hampered, which may weigh on price action until the Q3 reporting cycle begins in 3 weeks. As it is now, the S&P 500 is showing a top and looks ready to move lower, given the signal to sell.