CNBC's Jim Cramer said Wednesday that the stock market is being shaped by "the three Js."
"No broad-based rally from this level is sustainable without a major scientific breakthrough in the fight against Covid-19," he advised retail investors.
The comments came after Johnson & Johnson, which is working on a Covid-19 vaccine, moved up its expected start date for human trials to July from September. In the afternoon, Powell revealed that his agency could leave interest rates near zero through 2022 as the economy recovers from the coronavirus shutdown.
The Dow Jones Industrial Average dropped 282 points, or 1.04%, to 26,989.99, and the S&P 500 fell 0.53% to 3,190.14 at the close. The Nasdaq Composite continued to find its way higher, advancing 0.67% to a record close of 10,020.35.
"This is pretty much as high as we can get, absent a vaccine," Cramer said. "Until then ... stick with the Cramer Covid index, especially on the days when we get way too optimistic about a recovery."
Cramer's Covid-19 Index of stocks tailored to the current pandemic and post-pandemic worlds outperformed all the major averages. The index of 100 stocks rose 1.4% during the session.
As America moves forward with its reopening, traders have rotated their gains in the recovery stocks to mega-cap tech stocks.
"When you look at what went up today, it was the Covid stocks," Cramer said. "That's why the Dow and the S&P got hammered, but the Nasdaq was up big."
The stock market has been on a tear this month. Since the start of June, the Dow rallied in six straight trading days before pulling back in the last two.
In his speech Wednesday, Powell signaled that the central bank would leave rates in their current form until it is "confident that the economy has weathered recent events and is on track to achieve its maximum employment and price stability goals."
The Fed projects the economy could decline 6.5% this year, followed by a 5% and 3.5% gain in the following years.
Disclosure: Cramer's charitable trust owns shares of Johnson & Johnson.