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‘Sell Your Hedge and Move On’: Anxious Stocks Surge After Powell

  • Traders anticipated hawkish turn, expected even worse
  • Fed set to end bond buys in March, potentially hike rates

Stock traders prepared for the worst -- and didn’t get it.

That may be the best explanation for how a seemingly hawkish turn by Jerome Powell translated into the biggest rally since 2020 on the day of a Federal Reserve decision. Traders laid in hedges, braced for Armageddon, and then turned tail when Powell balanced his rates outlook with a strong dose of economic optimism.