Wharton finance professor Jeremy Siegel expects months of negative growth later this year and markets could struggle if the Federal Reserve doesn’t cut rates, he said on Wednesday. The central bank raised interest rates this month, but has also signaled a possible pause in rate hikes. For Siegel, that may not be enough if the economy improves. “My concern is that the Fed will say … ‘We’re going to stay tight,'” Siegel said on CNBC’s “Halftime Report.” “If we see employment numbers going negative, if we see GDP going negative. If the Fed doesn’t cut rates, then the market is going to have a tougher sleigh.” .SPX YTD S&P 500 year-to-date, Seigel said, as the banking sector crisis, lending restrictions will be implemented in the coming months. He expects this could slow economic activity and lead to negative employment growth. Inflation has been showing signs of moderation. Wednesday’s April consumer price index rose 0.4%, in line with expectations. However, the annual growth rate of 4.9% was lower than expected – the slowest pace since April 2021. “We know that a huge lag in the real estate sector will manifest itself in the second half of the year,” Siegel said. Rising housing costs were one of the factors that pushed the index higher in April, along with gasoline and used cars. Siegel said he thinks there will be “meaningful” gains in stocks this year if Fed officials “react as rigorously to the downside as they do to the upside.” If that happens, the S&P 500 could see a total return of 15%, he said. However, he warned that if the central bank did not respond quickly, he thought returns this year would be even more “depressed”, at just 5% to 10%.