Weaker-than-expected market conditions may keep the Federal Reserve from raising rates as much as predicted in 2016 as company earnings and the global economy will remain strained.

Tumbling commodity prices and economic sluggishness may continue to limit profit growth.  Flat to modest gains for U.S. equities ahead as slow U.S. expansion won’t be enough to shake the headwinds from global economic turmoil and the fall in energy prices.

Crude oil’s plunge has fueled a flight from risky assets around the world amid mounting concern that China’s policy interventions won’t revitalize growth. At the same time, the Fed is tightening monetary policy. Two weeks into 2016, the Standard & Poor’s 500 Index has dropped 8 percent, falling for a third straight week to the lowest close since August. The index is off to its worst annual start on record.  Will the Fed keep to its suggestion that interest rates will slowly rise?

In December, Fed Chair Janet Yellen and her colleagues on the Federal Open Market Committee elected to raise the benchmark federal funds rate from near zero, where it had been held since December 2008. The median committee member projected the central bank would raise interest rates four times in 2016, according to materials released following the meeting.

Divergence

Jeffrey Gundlach, founder and chief executive officer of DoubleLine Capital, told Barron’s the Fed may be forced to ease again after lifting rates one more time, given the uncertainty in the economy. Investors shouldn’t ignore the divergence between junk bonds and the S&P 500 Index, which is pointing to a bear market, he said.

The U.S. economy will probably grow by 2 percent this year, Gabelli said, powered chiefly by a stronger consumer. Stock and energy prices will look stronger heading into 2017.

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