The stock market rallied further Wednesday afternoon after Federal Reserve Chairman Jerome Powell announced another 75 basis point rate hike — as expected — and refrained from providing specific guidance on what central bankers will do at their September monetary policy meeting. During his post-July meeting news conference , Powell acknowledged the slowdown the economy is currently experiencing and emphasized that the path of future rate hikes will be data dependent. He also said he does not think the U.S. economy is in a recession. This isn’t a rally we want to chase because a handful of times this year the market has rallied on the rate hike announcement but got crushed in the days that followed on concerns that the Fed was not being aggressive enough to combat inflation. The next day, all the talk would be about how big the Fed needs to go at the next meeting to regain credibility. But could this time be different? The reaction to Alphabet (GOOGL) and Microsoft ‘s (MSFT) earnings Tuesday evening and Wednesday’s Powell remarks show the bears were caught offside. And the bulls have to be thrilled about Powell’s comments of a hike and let’s see how the data plays out into the September meeting because the data seems to be softening. Remember August is an off month from scheduled Fed meetings. We haven’t seen the slowdown come through in the consumer price index (CPI) or the producer price index (PPI) yet. That is key because inflation is still too hot. But let’s look at the facts. Gasoline prices are down month over month, housing is slowing, there is an inventory glut of apparel, semiconductor availability should be improving for automakers, and other commodities like cotton, wheat, lumber, and copper are trading well off their recent highs. By the time the Fed reconvenes in September, the data should start to go its way, and with a softer Fed in the background this fall, picking stocks with the highest quality earnings will be rewarded again. (Jim Cramer’s Charitable Trust is long GOOGL and MSFT. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
