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ERROR: type should be string, got "https://www.barrons.com/articles/federal-reserve-chair-jerome-powell-congress-testimony-51562719929\nThe Stock Market Wants Fed Chair Jerome Powell to Signal an Interest-Rate Cut. What If He Doesn’t?\nBen Levisohn\nFederal Reserve Chairman Jerome Powell Photograph by Saul Loeb/AFP/Getty Images\nWhen Federal Reserve Chairman Jerome Powell testifies before Congress on Wednesday, investors will be listening for him to hint that the Fed will cut interest rates at its next meeting at the end of July. The worrisome part is what happens if Powell doesn’t.\nThe Dow Jones Industrial Average has had a tough few days. The blue-chip benchmark is mired in a three-day losing streak after declining 22.65 points, or 0.1%, to 26,783.49 on Tuesday. The downward shift started after a strong payrolls number this past Friday signaled that the economy wasn’t weak enough for a 50-basis-point rate cut in July. (A basis point is 1/100th of a percentage point.) It should be noted, though, that the Dow is just 0.7% off its record-high of 26,966 hit last Wednesday. The S&P 500, meanwhile, is just 0.5% away from its all-time high of 2,995.82.\nSo will the Fed cut rates later this month? The market certainly thinks so—the fed-funds futures market puts the chances at 97.3%. But what Powell says on Capitol Hill on Wednesday and Thursday could have a big impact on those odds. NatAlliance Securities’ Andrew Brenner sees three scenarios that could play out Wednesday. Powell could be dovish, playing up the slowdown in global economic data and playing down the jobs data as a lagging indicator. If that’s the case, the market will start talking about a half-point rate cut again, and stocks could rally before falling because the Fed just acknowledged the seriousness of the global slowdown.\nRead more: Interest Rates Around the World Are Coming Down. What Investors Need to Know.\nOr Powell could preach the gospel of data dependence—even if the “market won’t believe him.” In that scenario, markets will price in a quarter-point cut in July and another in September—bullish for stocks, but not that bullish. Finally, Powell could signal that the Fed has no interest in lowering rates—and in turn tank the stock market. “Few expect this, not even us,” Brenner writes.\nIf the last option were considered a real possibility, the Dow wouldn’t be sitting near an all-time high—but don’t write it off too quickly. Philadelphia Federal Reserve President Patrick Harker said Tuesday that he sees no reason to cut interest rates yet. That’s the kind of language that Fed governors will be using a lot between now and the end of the month if it’s seriously contemplating not cutting rates at the July meeting, says Carmel Wellso, director of research at Janus Henderson Investors.\nIn fact, Wellso doesn’t think the Fed will cut at its July meeting at all. Jobs growth remains strong, while economic surveys like the ISM and NFIB remain strong, even if weaker than they were previously. As a result, Powell will focus on the U.S. slowing, but with the drivers coming from outside the U.S. “I don’t think we get the rate cut,” Wellso says. “We’ll get a selloff.”\nThe good news—if there is any—is investors will hear a lot more talk like Harker’s, so it won’t be a total surprise if the Fed does remain on hold in July.\nWrite to Ben Levisohn at Ben.Levisohn@barrons.com\nWhen Federal Reserve Chairman Jerome Powell testifies before Congress on Wednesday, investors will be listening for him to hint that the Fed will cut interest rates at its next meeting at the end of July."