Stocks rallied Wednesday after investors viewed the Federal Reserve as dovish, even as it raised interest rates by 0.75 percentage points. But investors may have gotten too excited about the central bank too soon, warned some Fed watchers. The S&P 500 was up 2.6% and the Nasdaq was up 4.1%. Fed Chairman Jerome Powell acknowledged that the actions of the central bank are causing some slowdown in the economy as well as the Fed statement. Powell also said lending rates could be in the 3.25% to 3.5% range by year-end, as Fed officials had predicted in their September forecast. “I don’t think he’s as hawkish as I think he is,” said Vince Reinhart, chief economist at Dreyfus and Mellon. “I think the market is loving what Jay Powell said in the press conference because Powell said that the latest summary of the economic projections is correct, and therefore the valuation associated with that is correct, and that should be enough to get the results everyone. hopefully it’s a reduction in inflation.” Reinhart said Powell was much less hawkish than he expected. “The market is not taking the Fed seriously,” said Jim Caron, head of global fixed-income macro strategy at Morgan Stanley Investment Management. , which means the Fed may feel the need to tighten even more, and they could get tougher. … I am a bit skeptical about this. I’m happy about that, but I’m skeptical. “When stocks rise, bond yields fall. Yields fall as bond prices rise. Two-year yields, which most reflect Fed policy, fell to 2.98% in late trading. on Wednesday, from a high of 3.06% just before the Fed’s 2pm ET rate announcement In the supported funds futures market, traders bet the Fed will raise rates to 3, 26% in December, down from 3.38% before the meeting.Reinhart noted that Powell also said the Fed will have to slow down the pace of consolidation for some time. Right now,” he said. “He’s stabilizing the policy rate and wants people to like it. And if the market likes it, he’s very comfortable with that outcome. The question is whether market outcomes produce economic outcomes.” Reinhart noted that tighter financial conditions, meaning higher yields and weaker equity markets, could be possible. required to get the results the Fed wants to see.The Fed has raised the lending rate to between 2.25% and 2.50% since March. But inflation continues to soar, with the consumer price index rising. Consumer spending rose 9.1% in June, the highest level since November 1981. Caron said stock investors have heard Powell say the economy and job market are strong and he doesn’t expect a “Look how interest rates are going, they’re not really going up,” Caron said. Okay, the worst is over. The 10-year yield was closely watched at 2.78% at the close, roughly in line with the time the Fed announced the rate hike. Strategists said that Powell’s acknowledgment that the Fed could slow down the pace of increases after introducing a tightening round is seen as a positive thing. The chairman gave no specific guidance for the September meeting and said the Fed will depend on the data. “I think the reason this has brought some relief to the equity markets is that the Fed acknowledges that there could be an impact on the stock market,” said Gargi Chaudhuri, head of iShares investment strategy at BlackRock, Americas. growth, for the economy, based on their policies. . “They recognize that there are two sides to this: there is a trade-off of growth against inflation. Their recognition is something we hear today that we haven’t heard before. ” As a result, she said, the market thinks the Fed is willing to slow down to prevent too much of a negative impact on the economy. Chaudhuri said the market is reacting to a number of things, including that the Fed stuck with a three-quarter point gain on Wednesday and didn’t go any stronger. It is a positive that the statement reflects that the economy is slowing and the fact that it will depend on future data, she said. “They know this is something the market is going to be paying attention to and they want to make sure we see that they acknowledge the slowdown in the economy” as a result of their policies, she said.