The pivot from rate hikes in 2022 and 2023 to rate cuts was widely forecast, and a big reason behind the S&P 500's epic 24% return in 2024. Most thought the Fed would continue to put its foot on the economic gas pedal, reducing rates in 2025, too.

Federal Reserve Chair Jerome Powell said on Tuesday he would not rule out a potential interest rate cut as soon as this month. The remarks come amid a public pressure campaign from President Donald Trump, who has repeatedly urged Powell to slash interest rates.

Weaker labor-market data this week could bolster the case for the Federal Reserve to resume interest-rate cuts soon. “My view is that I do think the Fed should cut in July,” said Matt Brill, head of North America investment-grade credit at Invesco Fixed Income, pointing to cracks in the jobs market.