The market rejoiced at Fed Chairman Powell’s seemingly dovish remarks. Maybe they weren’t that dovish, though.
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Fear of the Fed has been one factor weighing upon the stock market this fall. But lately that trepidation seems to have abated. Maybe it shouldn’t have.
The new, more benign view of the Fed is due to Chairman Jerome Powell’s upbeat take on the economy at an Economic Club of New York speech Wednesday, which many saw as suggesting a retrenchment on the Federal Reserve’s relentless rate-boost regimen. As a result, the market seems to be having a good week for a change, capped by Wednesday’s 2.3% advance of the S&P 500.
Coming three weeks before the Fed policymaking committee’s next expected interest rate hike, Powell’s address was widely anticipated. A number of investors have feared that the Fed will tighten too much and choke off economic growth, which would be poison for stocks. His comments soothed the market as he contended that the central bank continues to see a “solid” outlook for the US economy—and with rates “just below” what’s called the neutral range.
