(Bloomberg) -- It’s now two years since Federal Reserve Chair Jerome Powell threw in the towel on describing inflation as “transitory,” a key moment as the central bank embarked on the most aggressive monetary tightening campaign in a generation — and the world’s biggest stock market has literally gone nowhere. 

Powell had spent months arguing that the pandemic surge in prices was largely due to temporary forces. But on Nov. 30, 2021, he told Congress that inflation no longer appeared to be, in his terminology, transitory. 

It’s “probably a good time to retire that word,” he said in testimony before the Senate Banking Committee.

Since then the S&P 500 Index is virtually flat, as the Fed has repeatedly boosted interest rates to fight soaring prices. Of course, that doesn’t mean the stock market has been quiet over a dizzying two years in which 2022’s drubbing was followed by 2023’s rebound. Exactly 24 months later, the S&P 500 is about 5% below its January 2022 closing record amid growing speculation that the Fed is done hiking and will pivot to rate cuts by mid-2024.

For now, equities enthusiasts are in the driver’s seat. As they see it, Big Tech will fuel a fresh wave of profit growth, inflation is easing at long last and the economy still looks resilient. In addition, rate pauses historically usher in double-digit returns for stocks.

“My biggest concern is whether this economic strength will hold,” said Eric Beiley, executive managing director of wealth management at Steward Partners Global Advisory. “But I’m certainly staying invested in growth stocks because they’ve proven that they can still perform well in this environment.”  

Read more: Summers Says ‘Transitory Factors’ Behind Inflation Are Now Easing

While the US economy grew at the fastest pace in nearly two years last quarter, the battle between stock bulls and bears is sure to persist for months to come. The key overarching risk is whether the lagging impact of tthe Fed’s rate hikes since March 2022 will eventually tip the country into recession.

In a favorable sign for the equities optimists, a Bloomberg Intelligence model known as the Economic Regime Index shows that the worst of America’s economic pain appears to have passed. The index dropped back into recession territory last month after showing nearly a full rebound earlier this year from its trough in late 2022.  

While the model still signals potential economic weakness ahead, as long as it stays above its lows the outlook is favorable for the S&P 500, says Gina Martin Adams, chief equity strategist at BI. 

Investors are now looking to two appearances by Powell on Friday for more clues about the Fed’s path. The remarks come before the start of a quiet period ahead of the central bank’s Dec. 13 rates decision, when the Fed is widely expected to keep policy unchanged.

That said, bulls may have the most at stake should Powell push back on market bets that ebbing inflation will allow the Fed to starting easing by June or earlier, as that view is seen as laying the foundation for the equity rebound to extend into 2024. 

“If there’s any delay in how quickly the Fed lowers rates, it may not be pleasant for stocks,” said Julie Biel, a portfolio manager at Kayne Anderson Rudnick. “If the Fed doesn’t start cutting rates soon, the market is going to be pretty disappointed.” 

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