6 Words From Fed Chair Jerome Powell That Are Likely to Haunt Wall Street After His Term Ends in May 2026

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RegExp("[?&]notifications=1(&|#|$)");"desktop"===y&&i&&b.test(window.location.search)&&(i.checked=!0)};ge("ybar-mod-notification",(function(e){var t={isUH3:"crunch"===e.getConfig().ytheme,notifContainer:document.getElementById("notification-container"),notifBadge:document.getElementById("notif-badge"),notifMenu:document.getElementById("ybarNotificationMenu"),notifMenuOpener:document.querySelector("#ybarNotificationMenu + label"),notifDropdown:document.getElementById("notifDropdownContainer"),tooltipContainer:document.querySelector(".".concat($n)),notifLabel:document.querySelector(".".concat(Xn))};t.notifDropdown&&so(e,t)}))}()}};]]>Sean Williams, The Motley FoolSun, December 28, 2025 at 2:26 PM GMT+1 7 min readThe bull market has continued to steam ahead in 2025, with the Dow Jones Industrial Average, S&P 500, and Nasdaq Composite rising by 15%, 18%, and 22%, respectively.Federal Reserve Chair Jerome Powell recently uttered the six words that all investors fear.Regardless of what awaits the stock market in 2026, time has a way of supporting long-term-minded investors.10 stocks we like better than S&P 500 Index ›With just a handful of trading days left in 2025, it's safe to say that the stock market has, once again, delivered for investors. The widely followed Dow Jones Industrial Average (DJINDICES: ^DJI), benchmark S&P 500 (SNPINDEX: ^GSPC), and growth stock-propelled Nasdaq Composite (NASDAQINDEX: ^IXIC) have roared higher by 15%, 18%, and 22%, respectively, through the closing bell on Dec. 24.While investors, including Wall Street analysts and pundits, are expecting this steady climb to continue into the new year, this optimism isn't universal.One of Wall Street's subtle critics happens to be one of the most influential policymakers in the country, Federal Reserve Chair Jerome Powell.Federal Reserve Chair Jerome Powell delivering remarks. Image source: Official Federal Reserve Photo.Usually, Powell and the other Fed governors refrain from making remarks that specifically pertain to the stock market. The Federal Reserve's primary job is to oversee the nation's monetary policy, with the goals of maximizing employment and stabilizing prices. The directional movement of equity markets is secondary to these goals.With this being said, Fed Chair Powell, whose term is set to end in May 2026, recently fielded a question regarding the role that stock market valuations play in shaping Federal Open Market Committee (FOMC) policy. The FOMC is a 12-person body (that includes Powell) responsible for adjusting the federal funds rate and overseeing open market operations, including the purchase and sale of long-term Treasury bonds to influence yields.Said Powell,We do look at overall financial conditions, and we ask ourselves whether our policies are affecting financial conditions in a way that is what we're trying to achieve. But you're right, by many measures, for example, equity prices are fairly highly valued.The point of emphasis is the final six words of Powell's statement: "equity prices are fairly highly valued."Although valuations are subjective (i.e., what you find to be pricey might be viewed as a bargain by another investor), one time-tested valuation measure fully supports Fed Chair Powell's commentary that the broader market is historically expensive. This valuation tool is the S&P 500's Shiller Price-to-Earnings (P/E) Ratio, which is also referred to as the cyclically adjusted P/E Ratio, or CAPE Ratio.Terms and Privacy PolicyPrivacy & Cookie SettingsMore InfoS&P Futures6,952.25 -2.75 (-0.04%)Dow Futures48,753.00 +4.00 (+0.01%)Nasdaq Futures25,714.00 -25.75 (-0.10%)Russell 2000 Futures2,537.20 +1.00 (+0.04%)VIX14.20 +0.60 (+4.41%)Gold4,352.10 +8.50 (+0.20%)Trending tickersBTC-USD Bitcoin USD 87,129.79 -1,096.99 (-1.24%)MU Micron Technology, Inc. 294.37 +9.70 (+3.41%)BNAI Brand Engagement Network, Inc. 2.5050 +1.3050 (+108.75%)RARE Ultragenyx Pharmaceutical Inc. 19.72 -14.47 (-42.32%)ETH-USD Ethereum USD 2,933.58 -31.11 (-1.05%)PortfolioSign in to access your portfolioSign inTop gainersPRAX Praxis Precision Medicines, Inc. 304.58 +35.63 (+13.25%)RGC Regencell Bioscience Holdings Limited 23.48 +2.32 (+10.96%)DBRG DigitalBridge Group, Inc. 15.26 +1.34 (+9.63%)BLTE Belite Bio, Inc 165.29 +10.36 (+6.69%)PSNY Polestar Automotive Holding UK PLC 18.66 +1.12 (+6.39%)Top losersSBSW Sibanye Stillwater Limited 14.20 -1.50 (-9.55%)BRBR BellRing Brands, Inc. 27.33 -2.83 (-9.38%)DJTWW Trump Media & Technology Group Corp. 7.38 -0.74 (-9.11%)DRD DRDGOLD Limited 30.54 -2.79 (-8.37%)HMY Harmony Gold Mining Company Limited 19.95 -1.79 (-8.23%)Most activeNVDA NVIDIA Corporation 188.22 -2.31 (-1.21%)DBRG DigitalBridge Group, Inc. 15.26 +1.34 (+9.63%)NIO NIO Inc. 5.34 +0.24 (+4.71%)PLUG Plug Power Inc. 1.9700 -0.1000 (-4.83%)TSLA Tesla, Inc. 459.64 -15.55 (-3.27%)Top economic eventsEarnings eventsMy earnings eventsEarnings events