The S&P 500 just had its best two-day period since April 2020

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Stocks smell a Fed pivot bonds not so much

, author of Data: FactSet; Chart: Kavya Beheraj/AxiosInvestors seem to think the Fed is close to pivoting away from relentless rate hikes. Driving the news: The S&P 500 just notched its best two-day run — up 5.7% — since the early days of the COVID crisis when the Fed rushed in to, basically, from collapsing. Tuesday's 3.1% gain for the benchmark index was the best of the year. (Twitter's 22% gain helped — but stocks were up across the board.) The big picture: The of both stocks and bonds has been driven almost entirely by the Fed's effort to raise rates to tamp down inflation.In recent weeks, , Fed chair Jerome Powell has doubled down on the central bank's commitment to keep hiking — even acknowledging that it . Between the lines: Stock market investors seem to think that potential pain — and afterward, a pivot away from rate hikes — could come sooner than they thought even a few days ago. The reasons: New data shows the U.S. jobs engine may be starting to sputter. Openings in August . Manufacturing is also . Other central banks may be easing up on rate hikes — Australia just hiked by . And financial strains — like the that hammered pensions, or persistent market doubts — are emerging. Yes, but: The bond market doesn't share the stock market's conviction that we're near the end of the rate-hiking cycle. If it did, we'd see yields on Treasury bonds falling more sharply. What we're watching: For confirmation that this is just another bear market rally, the type of periodic upswing — like — that can take hold from time to time despite the broader downward trajectory that defines a bear market. If we don't get confirmation from Fed officials that they think they're getting inflation under control, expect this rally to peter out, too.

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