Bear no longer

Volatility anticipated, and volatility there was. A speech from Fed Chair Jay Powell on Wednesday sent markets flying amid signals that the central bank might start slowing its aggressive rates of interest boosts.

When the dust settled at the end of the session, the Nasdaq Composite (COMP.IND) closed up a whopping 4.4%, while the S&P 500 (SP500) and the Dow (DJI) finished the day ahead by 3.1% and 2.2%, respectively.

While Powell warned that the Fed might need to keep restrictive policy for a long time – as policymakers needed to see “substantially more evidence” of falling inflation – he buoyed markets with a less-hawkish stance on the pace of interest hikes and by raising hopes that a soft landing was “very plausible.” “It makes sense to moderate the pace of our rate increases as we approach the level of restraint that will be sufficient to bring inflation down. The time for moderating the pace of rate increases may come as soon as the December meeting,” the Fed chief stated in ready remarks for an occasion hosted by The Brookings Organization.

“Despite some promising developments, we have a long way to go in restoring price stability,” Powell proceed. “My colleagues and I do not want to overtighten because… cutting rates is not something we want to do soon. The truth is that the path ahead for inflation remains highly uncertain. That’s why we’re slowing down and going to try to find our way to what that right level is. It can’t be that we can go on for five years at a very high level of inflation and that it doesn’t work its way into the wage and price setting process pretty quickly. That’s a serious concern.”

Technically: Wednesday’s relocation resulted in the Dow Jones Industrial Average increasing more than 20% given that Sept. 30 – its floor of the year – implying it is now formally in booming market area. In other places, the benchmark S&P 500 is up 17% from its YTD low, and while tech-heavy Nasdaq still has some ways to go, it has rebounded almost 14%.