the stock market’s bounce back from last year’s carnage will be again put to the test as investors closely listen to federal reserve chairman jerome powell’s testimony before congress this week for clues to just how high interest rates need to go to win the fight against inflation powell will deliver the latest semiannual report on monetary policy and the economy on tuesday to the senate banking committee and on wednesday to the house financial services panel both hearings begin at 10 am eastern powell’s testimony will probably be his last public remarks before the next policy meeting of the federal open market committee or fomc on march 2122 see powell to talk to congress about the possibility of more interestrate hikes not fewer fundstrat’s head of research tom lee expects powell to reiterate the “data dependence” message in his speech affirming market expectations for another 25 basis point increase in the fedfunds rate at the march meeting “many ‘inflationistas’ are saying a 50basispoint hike is needed because the january data was so ‘hot’ that is the data reactivity of the bond and stock market but we expect powell to emphasize that rates are near neutral now so there is less of a need to be higher in a hurry and now fed can be data dependent by the way” wrote lee in a monday note fedfunds futures traders have priced in a 694 chance of a 25 basis point rise and a 306 chance of a 50 basis point increase according to the cme fedwatch tool traders had seen only a 33 chance of a 50 basis point rise a month ago a run of strongerthanexpected economic data that began in early january including the january inflation report which showed prices were not moderating as fast as the fed would like and robust employment data has forced financialmarket investors to rethink the fed’s path and bet on bigger rate hikes in its next policy meeting fed policy makers stepped down to a 25 basispoint increase last month after a halfpoint move in december and four jumbo 75 basispoint rate increases last year st louis fed president james bullard and cleveland fed president loretta mester both said last month that they had supported a 50basispoint hike at the jan 31feb 1 meeting minutes of the meeting showed that a “few” policy makers had backed the bigger move neither bullard nor mester are voting members of the fomc in 2023 also read minneapolis fed joined st louis and cleveland in pushing for 50basispoint discountrate hike last month fed policy makers may be particularly reluctant to boost the size of rate increases after downshifting at the last meeting analysts said “moving to 50basispoint would be a sizable change in policy and reversal of the slowing and frankly would be viewed as undermining fed credibility” wrote lee see stock market faces crucial test this week 3 questions that could decide rally’s fate chris weston head of research at australiabased brokerage pepperstone said in a note on sunday that powell will “likely defend the fed’s actions” and “likely make out they are going to do everything they can to bring down inflation to target” however given the fact that both the market and fed are living data point to data point weston said they are still “flying blind” until they get february nonfarm payroll data on friday and the february consumerprice index on feb 13 which in theory could result in them targeting a terminal rate “north of 6 and require 50basispoint increments” to get them there in a quicker fashion said weston “the market is expecting some movement from his words but trading any speech is tough so i would be reacting and not anticipating” weston added see pair of wall street firms see friday’s job data coming in way above consensus economists surveyed by the wall street journal expect february payrolls to have grown by 225000 however economists at wall street banks such as deutsche bank and jefferies see the figure coming in way above consensus estimates us stocks traded slightly higher on monday with the sp 500 spx and the nasdaq composite comp each rising 02 the dow jones industrial average djia gained 01 last week the dow industrials rose 17 for the week and snapped a fourweek losing streak the sp 500 gained 19 while the technologyheavy nasdaq advanced 26 according to dow jones market data read why the february jobs report is unlikely to reverse a january blowout in this week’s key economic data release