Stocks Rally as Powell Hints at End of Fed Hiking Cycle

Markets rallied as Powell's comments hinted the Fed may be nearing the end of its hiking cycle. Stocks jumped despite Fed's uncertainty on achieving a less restrictive stance.

Calling the dot plot forecast into question signals a more dovish turn for the Fed. Investors are charging up hopes the hiking cycle is ending.

Powell explained why recession is less likely in the near term and strong data is not problematic. This reduced fears of an imminent downturn.

Two processes are at work - unwinding pandemic distortions and restrictive monetary policy moderating demand. The latter is still needed to reach price stability.

Supply side gains like increased labor force participation are helping the economy currently. But the Fed likely still has ground to cover on inflation through managing demand.