Markets 'surprised' by Powell's comments -strategist

STORY: U.S. stock indexes fell on Tuesday as Federal Reserve Chair Jerome Powell told Congress the central bank will likely need to raise interest rates more than expected as it seeks to rein in rising prices.

The Fed is prepared to move in larger steps if the "totality" of incoming information suggests tougher measures are needed to control inflation, the U.S. central bank chief said in a hearing before the Senate Banking Committee.

Traders dramatically raised their bets of a 50-basis-point rate hike in March after Powell's comments, with money market futures pricing a more than 57% chance of such a move, from 23% before the remarks.

The Fed's policy rate is currently in the 4.50%-4.75% range. As of December, officials saw that rate rising to a peak of around 5.1%, a level investors expect may move at least half a percentage point higher now.

But according to Stovall, the Fed's terminal rate "remains the $64,000 question...."