U.S. stock index futures fell on Friday as investor sentiment remained damp due to the hawkish interest-rate outlook of Federal Reserve Chair Jerome Powell in his two-day congressional testimony.

Appearing before the Senate Banking Committee, Powell reiterated his view that more rate hikes are likely in the months ahead.

His comment that the Fed will proceed with caution led the S&P 500 and the Nasdaq pull some gains in the previous session, but remained on course for a weekly decline.

“The ever-present tug of war between bears and bulls seems to be at an impasse, with markets relatively steady over the week as investors weigh up the Fed’s next move after comments from Powell suggest hikes are far from over,” said Matt Britzman, equity analyst at Hargreaves Lansdown.

“Investors should strap in for rates to go higher than they want, for longer than they’d like.”

Bond markets are still pricing in one more rate hike of 25 basis points in July, according to CME Group’s FedWatch tool, as opposed to two more as suggested by Powell.

Richmond Fed President Tom Barkin said he remains unconvinced that inflation is on a steady path downward, but would not prejudge what the Fed should do at its July 25-26 meeting.

Yields on the 2-year, which best reflects interest rate expectations, and 10-year Treasury notes edged lower on Friday.

“The latest data aggravated fears about a potential recession, which has further dampened risk appetite,” a note from Deutsche Bank said.

S&P Global’s Purchasing Managers’ Index for both U.S. manufacturing and services activity will be on investors’ radar later in the day and will provide more clues on the strength of the economy.

Investors will also monitor comments from St. Louis Fed President James Bullard, Atlanta Fed President Raphael Bostic and Cleveland Fed’s Loretta Mester.

At 5:36 a.m. ET, Dow e-minis were down 110 points, or 0.32%, S&P 500 e-minis were down 21.75 points, or 0.49%, and Nasdaq 100 e-minis were down 101.75 points, or 0.67%.

3M Co climbed 3.5% after the chemical company reached a $10.3 billion settlement with a host of U.S. public water systems to resolve water pollution claims tied to “forever chemicals”.