The Fed probably won't be delivering any interest rate cuts this summer

Investors likely will have to sweat out a summer during which it looks increasingly improbable that the Federal Reserve will be cutting interest rates.

A batch of stronger-than-expected economic data coupled with fresh commentary from policymakers is pointing away from any near-term policy easing. Traders this week again shifted futures pricing, moving away from the likelihood of a reduction in rates in September and now anticipating just one cut by the end of the year.

The broader reaction was not pleasant, with stocks suffering their worst day of 2024 on Thursday and the Dow Jones Industrial Average breaking what had been a five-week winning streak ahead of the Memorial Day break.

"The economy may not be cooling off as much as the Fed would like," said Quincy Krosby, chief global strategist at LPL Financial. "The market takes every bit of data and translates it to how the Fed sees it. So if the Fed is data dependent, the market is probably more data dependent."

Over the past week or so, the data has sent a pretty clear message: Economic growth is at least stable if not on the rise, while inflation is ever-present as consumers and policymakers alike remain wary of the high cost of living.

Examples include weekly jobless claims, which a few weeks ago hit their highest level since late August 2023 but have since receded back to a trend that has indicated companies have not stepped up the pace of layoffs. Then there was a lower-profile survey release Thursday that showed stronger than expected expansion in both the services and manufacturing sectors and purchase managers reporting stronger inflation.

Both data points came one day after the release of minutes from the last Federal Open Market Committee meeting indicating central