The latest hawkish commentary from Federal Reserve Chair Jerome Powell on Wednesday hasn’t significantly eroded investor optimism. The stock market rally appears intact.

I enjoy playing poker with my pals, and I get the feeling that perhaps, in playing the hawk, Powell was bluffing. When the damage from previous interest rate hikes starts to become more manifest in the economy, the Fed will likely feel enormous pressure to cut rates or at least stand pat longer.

The Fed’s announcement of a pause in interest rate tightening belied Powell’s “Debbie Downer” commentary during his post-meeting press conference. The Fed held rates steady, keeping the benchmark funds rate at a range of 5.00% to 5.25%.

Powell asserted that a pivot is not in the cards this year (and probably not even next year), and the latest pause is more of a “skip.”

“It will be appropriate to cut rates at such time as inflation is coming down really significantly,” Powell said. “And again, we’re talking about a couple of years out. As anyone can see, not a single person on the committee wrote down a rate cut this year, nor do I think it is at all likely to be appropriate.”

I’m reminded of a famous quote from John Mitchell, attorney general under the Nixon administration: “Watch what we do, not what we say.”

There were no dissents among the 12 Fed officials that voted to leave rates unchanged this time around. In the wake of that unanimous decision, bond yields have been falling, which has helped send growth stocks higher.

It’s telling that the mega-cap tech stocks that have largely driven this rally are continuing their ascent. At the heart of this tech rally, of course, is enthusiasm over artificial intelligence. But falling interest rates also tend to boost “growthier” investment fare.

The latest report on the labor market depicts resiliency but deceleration. That’s the sort of balance that the Fed seeks in its fight to curb inflation.

The U.S. Bureau of Labor Statistics reported Thursday that, for the week ending June 10, initial jobless claims came in at 262,000, unchanged from the previous week’s revised level (see chart).

Source: U.S. Bureau of Labor Statistics

The previous week’s level was revised up by 1,000 from 261,000 to 262,000. The four-week moving average was 246,750, an increase of 9,250 from the previous week’s revised average.

Also on Thursday, the Commerce Department reported that U.S. retail sales unexpectedly rose in May as consumers bought more motor vehicles and other durable goods. Retail sales increased 0.3% last month after rising 0.4% in April. The consensus had called for a decline in sales of 0.1%.

WATCH THIS VIDEO: The S&P 500’s New Bull Market Is Underway…What Now?

The main U.S. stock market indices closed sharply higher Thursday as follows:

• DJIA: +1.26%
• S&P 500: +1.22%
• NASDAQ: +1.15%
• Russell 2000: +0.81%

All 11 S&P 500 sectors finished in the green. Communication services and technology led the way.

Smooth sailing from here? Hardly. A recession is imminent (albeit one that’s probably short and mild). A hyper-partisan, dysfunctional Congress will soon face additional budget votes. Russia is rattling its nuclear saber again. China and the U.S. remain at loggerheads. But investors continue to successfully ascend the wall of worry.

The bull case strengthens…

Put aside the dire headlines for now. You shouldn’t let yourself get whipsawed by the daily news cycle. Market timing based on news events is a fool’s game and deleterious to long-term wealth-building. It’s more important to know that the equity rally has passed crucial support tests.

The S&P 500 and NASDAQ indices have officially exited the bear market and trade well above their major moving averages. The CBOE Volatility Index (VIX) has been falling, whereas the New York Stock Exchange Advance/Decline (NYAD) line has been rising. A failing VIX denotes less fear and risk; a rising NYAD line suggest greater breadth.

What’s more, the latest inflation reports show milder inflation, and the Fed just skipped a rate hike. It seems to me that investors are holding a winning hand.

However, if you’re still nervous about the market risks I’ve just described, I suggest you consider the advice of my colleague, Robert Rapier.

As chief investment strategist of Rapier’s Income Accelerator, Robert has developed strategies that make money in bull or bear markets.

Robert Rapier can show you how to squeeze up to 18 times more income out of dividend stocks, with just a few minutes of “work” each week. Click here for details.

John Persinos is the editorial director of Investing Daily.

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