Economists are taking a second look at Federal Reserve Chairman Jerome Powell's speech Wednesday and wondering if the sharply dovish reaction wasn't a bit overdone. The central bank chief's proclamation that interest rates are "just below" what would be considered a "neutral" level represents a definite change in verbiage from his October "a long way from neutral" assessment. But as a practical matter, these Fed watchers say, the chairman was only saying that the current rate is near the "range" of estimates from the Fed's individual policymakers. That range is between 2.5 percent and 3.5 percent. The distinction could be critical for where the Fed is headed. "If there has been one certainty of late it is the market's ability to misinterpret Fed Chairman Powell," Tom Porcelli, chief U.S. economist at RBC Capital Markets, said in a note. "The market viewed this as a dovish development. We think this is the wrong interpretation. Powell is not suggesting that since they are just below the range they may stop soon. All he is doing is pointing out an obvious idea."

Nevertheless, Powell's comments at The Economic Club of New York sparked a powerful market rally. The Dow Jones Industrial Average roared to a 618-point gain, helping to alleviate much of the pain the market has experienced since the chairman's October comments. But there didn't look to be follow-through Thursday. Major indexes were lower Thursday as Wall Street digested both what Powell had to say and the challenges ahead. In addition to the stock market gain, markets also lowered their expectations for future rate hikes, which already had been below Fed forecasts of another move in December and three more in 2019. Fed fund futures trading now indicates a quarter-point increase next month, then only a 29 percent chance of two hikes in 2019, according to CME calculations. Porcelli thinks that's the incorrect view, pointing out that in past rate-hiking cycles the funds rate has ended up 100 basis points, or a full percentage point, above the neutral estimate. "We will say it again, despite the broad narrative that the Fed has gotten spooked by the equity market volatility (something Powell again refuted in his speech today), the most likely trajectory for Fed policy has not changed," he said. "The market, by pricing in just about 1 hike next year has implicitly a much weaker economic narrative baked in. We continue to see the risks around economic growth skewed to the upside based on trends borne out in the data." WATCH: Why you aren't feeling a boost in your paycheck

Goldman, JP Morgan both see four hikes in 2019