For years now, U.S. equity markets have rejoiced each and every time expectations for the first Federal Reserve rate hike have been pushed back. Mr. Zero interest rate policy has been the best friend of the stock market bar none. “Lower for longer” has been so ingrained into our psyche that anytime there is a hint of negative news we expect calls for the Fed to remain on hold to ensue.

And on hold they will stay, if the futures market is correct. After tepid wage growth in the most recent employment report and continued worries about Greece, the odds of a 2015 rate hike have dipped below 50%. The market is now expecting the first rate hike to occur in January 2016. At that point, it will have been seven years of 0% interest rates.

Normally, we would see stocks surge higher on such a development but the behavior seems to be changing of late. As I wrote a month ago, there’s been a stalemate between bulls and bears in 2015. Two consecutive quarters of negative earnings growth, declining revenues over the past year, and median valuations at all-time highs have left the market in a more vulnerable position.

Thus far, the Fed remaining on hold and the 48 other central banking easing measures have been enough to keep the sellers at bay.

But momentum is waning here and market participants seem increasingly indifferent to these dovish actions. The S&P 500 is very close showing a negative return over the prior six months for the first time since early 2012. This is important because there are many new investors who have come to view the S&P 500 as a risk-free instrument. How will they react when they find out it is not?

When Lower for Longer is Not Enough

If it is indeed the case that lower for longer is not enough to support the markets, then we will need to see one of two things occur: 1) earnings improvement or 2) more Fed action.

By my calculations, earnings are likely to decline for a third consecutive quarter with the announcements starting next week. That leaves markets with the hope of more Fed action six years into an economic expansion. Back in 2010 and 2011 after the end of QE1 and QE2, we saw stock declines of 17% and 21% before new Fed programs. Today, the S&P 500 is only 3% off of its all-time high. It should be an interesting summer.