us stock investors are clearly not too happy with what federal reserve chairman jerome powell has said in the past two days and there’s reason to think they’ll get even more dissatisfied in the weeks and months to come amid growing expectations that the fed funds rate may reach 6 this year one of the highest levels in the past two decades   rick rieder chief investment officer of global fixed income for new yorkbased blackrock inc blk  put a 6 level for us interest rates on the map following powell’s first day of testimony to congress on tuesday blackrock is the world’s largest asset manager overseeing almost 86 trillion as of december its view has only gained further traction as powell testified again on wednesday according to fhn financial’s chief economist chris low and ben emons a senior portfolio manager at newedge wealth who are both in new york  though powell took pains on wednesday to clarify that policy makers have not yet made any decision about the size of march’s rate hike and are not on a “preset” course financial markets reacted negatively anyway us stocks were mostly lower in afternoon trading the policysensitive 2year treasury yield tmubmusd02y inched further above 5 and the treasury curve went more deeply negative in a worrisome sign about the economic outlook the ice us dollar index dxy rose to its highest level of the year and traders factored in an 808 chance of a halfpercentagepoint fed rate hike on march 22  with investors and traders largely focused on the size of the fed’s next interest rate hike in two weeks it’s the most likely path for interest rates over the next handful of months that has the potential to roil financial markets even further fed funds futures traders now see a 471 chance that the fed funds rate will get to 5756 or higher by july and a 505 chance of that happening by september according to the cme fedwatch tool that’s up from a current fed funds range of between 45 and 475   meanwhile more economists are revising their fed funds rate forecasts to 5756 according to fhn’s low  “powell’s comments this week certainly suggested that the equity markets have been a little too overconfident in the prospects of a soft landing through the course of 2023” david keller chief market strategist at stockchartscom in redmond washington said in an email to marketwatch on wednesday “growth stocks in particular have thrived on the expectation that inflation would quickly become a nonissue and equities would resume a more normal growthdriven rally phase” keller said “our main equity benchmarks like the sp 500 and nasdaq composite are very growthoriented so higher rates suggest limited upside for these benchmarks until interest rates have reached their peak for the cycle after what we have heard this week it appears that the finish line is farther away than investors thought” growing expectations for a 6 fed funds rate threaten to undermine the sp 500 and nasdaq composite which are off to their best start to a year since 2019 the sp 500 spx is up 37 for the year through wednesday versus 942 through the same period in 2019 the nasdaq composite comp is up 103 on a yeartodate basis versus 1165 over the same time three years ago  the risk of a 6 fed funds rate has been around since at least last april and resurfaced again in february when it was seen as a slim chance in fed funds futures trading until powell’s testimony this week financial markets largely ignored the risk the fed funds rate hasn’t been at or above 6 since march 2000 to january 2001 when alan greenspan led the fed  “a 60 terminal rate expectation if widespread would likely see the dollar extend the recovery that began in february” said marc chandler managing director at bannockburn global forex in new york  in addition “the stock market would take it hard” with the sp 500 likely to fall near 38003850 the level that corresponds to the “congestion” seen at the end of last year he said “it is an educated guess on momentum and psychology more than a statement about earnings or growth” and such a move could occur quickly and be triggered by more hawkish comments or rate expectations from the fed a high reading on the next consumer price index and “another very strong employment report”   the 2year yield “could head toward 550 if not a little higher” while the 10year yield may not rise much above 425 implying a further inversion of the spread between those two rates chandler said in an email to marketwatch moreover “the market would judge a hard landing as more likely”  on tuesday the sp 500 and dow industrials djia booked their worst day in two weeks after powell told the senate banking committee that the ultimate level of rates is likely to be higher than previously thought and that the fed would be prepared to accelerate the pace of rate hikes if needed the nasdaq also dropped 13  powell reiterated the same message to the house financial services committee on wednesday yet couched it in more flexible terms   at new yorkbased newedge which oversees about 12 billion in assets emons said that the chairman has nonetheless “accomplished one thing with his pragmatic messaging a 6 fed funds rate is quickly becoming the consensus”