Stocks soared Friday after Federal Reserve Chair Jerome Powell hinted that interest rate cuts are on the horizon, sparking optimism across Wall Street.
The Dow Jones Industrial Average climbed 462.30 points, or 1.14%, to close at 41,175.08.
The Nasdaq Composite surged 1.47% to 17,877.79, while the S&P 500 rose 1.15% to end the day at 5,634.61—once again flirting with record highs set just last month.
Friday’s rally capped off a winning week for all three major indexes.
The Dow gained nearly 1.3%, the Nasdaq advanced 1.4%, and the S&P 500 notched a 1.45% increase, reflecting a market buoyed by the prospect of monetary easing.
Powell’s remarks at the Fed’s annual Jackson Hole symposium were the catalyst.
He signaled that the Federal Reserve is prepared to lower interest rates, though he stopped short of specifying when or by how much.
Instead, Powell emphasized that future cuts would depend on economic data and the broader outlook.
Investors took Powell’s words as a green light, with markets rallying on the expectation that rate cuts are just around the corner.
The CME Group’s FedWatch Tool showed traders are unanimous in anticipating a rate cut at the Fed’s September meeting, though there’s still debate over how steep that cut will be.
Technology stocks were the day’s big winners, with Tesla and Nvidia each jumping over 4% as investors bet that a lower-rate environment would boost the tech sector.
Small-cap stocks also rode the wave, with the Russell 2000 advancing more than 3%.
“The market is kind of breathing a sigh of relief,” said Skyler Weinand, chief investment officer at Regan Capital.
“The market sees: ‘All right, the cycle has changed.’ We haven’t taken a 180 per se, but we’ve taken a right turn towards an easing cycle.”
As Powell’s words echoed through the market, businesses and traders alike found themselves on the edge of a new chapter—one where the Fed’s hand is poised to guide the economy gently down from its high perch, softening the landing with every cut.
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