(Bloomberg) — Jerome Powell’s hawkish pivot shocked financial markets. Stocks are now higher a week later.

It staged the largest rally in its history since March, to erase all losses over the last week. After Friday’s devastation, the speculative fringe rose to new heights Tuesday. The index that tracks meme stocks rose by more than 4% while the one that includes airlines gained 1.6%. SPACs rose more than 2 %, a gauge that tracks newly-public companies increased more than 4 %, and even cryptocurrency rallied with an increase of more than $51,000.

It’s a stunning about-face for risk assets that went into a tail spin after the Federal Reserve chair suggested he favored accelerating the removal of monetary support. What follows are takes from market-watchers on why the market is looking past the Fed’s potential change in policy:

Aoifinn Devitt, chief investment officer at Moneta Group Investment Advisors, said last week’s turbulence owed more to the omicron variant than the Fed’s changed view on the nature of inflation, when Powell told lawmakers “transitory” is no longer an appropriate description:

“It was the variant’s negativity compounded by his statement. But equally we’ve all known that it hasn’t been transitory for some time. They’re not going to take a radical move, they’re just bringing forward the rate rises slightly. My sense is that that was just, it was compounding the fragility of the markets with the variant and now that that’s been factored in, the variants didn’t seem as bad, markets have kind of digested that.”

Investors in the United States woke Tuesday morning to good news about the virus. GlaxoSmithKline Plc, NYSE:) Plc reported that its vaccine against this strain was 71% effective. This news came on Monday, when data from South Africa suggested that omicron effects are relatively mild.

“I strongly believe that the data coming in from Omicron is totally driving the market,” said Kim Forrest, chief investment officer at Bokeh Capital Partners.

“Over the weekend I noticed more of the mainstream media publishing reports of mild cases, though the market was poised for recovery. Supply chain problems, particularly in autos seem to be diminishing rapidly. I’m also noticing that more staff are working at restaurants and other businesses which were under stress. Santa Claus looks ready to rock.”

Joe Gilbert, Portfolio Manager at Integrity Asset Management

“The market was definitely in a shoot-first, ask questions later mode after the discovery of omicron. It was instinctive to put everything at risk and invest in Treasuries. We got dramatically oversold very quickly and as more Covid news emerges, investors are more comfortable owning risk again as we have adequate vaccines and antivirals to not stall the recovery.”

After the weaker-than-expected jobs report, economic data so far has been very light this week. This Friday’s consumer prices report will be the biggest. Investors speculated that the Fed will be able to halt its plan to reduce asset purchases.

Francois Savary, investment officer at Prime Partners SA, which oversees about $4 billion, said the Fed’s new stance doesn’t mean tightening is imminent.

“There was an immediate reaction that was very negative in the market but people at the end of the day are thinking that OK, the Fed is just getting some room for maneuver. Many are starting to think that we may have gone too far when it comes to how many rate rises will occur next year. Two is OK. We’re not so sure about the third one. At the end of the day it’s not a game-changer in monetary policy.

Grace Capital President Cate Faddis and CIO suggested that the market is still not convinced the Fed will disappear.

The market doesn’t believe the Fed has changed its decades-old dovish stance. It concluded it could be irrelevant to basic economic fundamentals. Inflation we are seeing today is not caused by cheap money. Therefore, raising rates won’t have any effect. Raise rates won’t solve the supply-chain problem, or address unmet demand in an open economy.

Data from Bank of America (NYSE) shows that a part of the support came via institutional clients

“Clients were big buyers of the dip last week, with inflows from all client groups and into both single stocks and ETFs. Inflows were the largest in Tech, Discretionary & Financials; only Industrials, Health Care & Utilities stocks saw outflows. The March buybacks reached their highest point since March. YTD buybacks still tracking below 2019 (pre-COVID) levels.”

It was not clear that the rally would continue. The S&P 500’s 2% gain has it on track for a move of at least 1% for the seventh time in eight sessions, a bout of turbulence not seen so far this year. Matt Maley, Miller Tabak + Co. said this:

“There is no question that things have changed in recent weeks. The stock market’s biggest one-day drop for the majority of the year has been accompanied by a rapid rebound and continued to rise. The last week has seen this change. Don’t get us wrong, the stock market has been able to bounce back quickly after the big down days recently, but it has not been able sustain those bounces like it has for most of this year. Instead, more severe declines have ensued shortly after those bounces.”

Mike Bailey, FBB Capital Partner’s director of Research, said:

“To be fair, I would expect the same pattern next time, whether it’s something with the Fed, fiscal policy, tech stocks, or geopolitics. It could be that stocks return to their historical 5-10% annual returns in 2022, which would make it a difficult slog. Three years of shoot-the-lights-out performance may be lulling investors into a sense of complacency.”

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