Stock market volatility driven by Fed rate expectations

What happened: Minneapolis Fed President Neel Kashkari shifted his outlook, now expecting an interest rate hike this year. Market sentiment turned bearish as the probability of Fed rate hikes surged, with the CME Group's FedWatch Tool indicating near-certainty. Global stocks fell, led by tech, as investors braced for aggressive Fed action against inflation, despite oil prices slipping.

Market impact: Volatility surged as investors priced in higher borrowing costs. Tech stocks, sensitive to interest rates, led the downturn, with the STOXX 600 falling 1.2%. The market's focus shifted from potential rate cuts to hikes, flipping Wall Street's Fed interest-rate bets. Despite gas prices falling, economists worry about persistent sticky inflation, driving concerns about Fed policy.

What to watch next: The upcoming Fed meeting on June 14-15, where the central bank's policy stance will be clarified. Also, watch for the U.S. Consumer Price Index (CPI) release on June 10, which could provide insights into inflation trends. Additionally, monitor tech stocks' performance, as they are a bellwether for market sentiment towards rate hikes.