Wall Street Rallies as Powell Hints at Fed Rate Cut
Markets in the United States lit up today after a much-anticipated speech from Federal Reserve Chair Jerome Powell at the Jackson Hole Economic Policy Symposium. His remarks were closely watched, and they delivered just enough of a signal to spark strong reactions on Wall Street.
In his address, Powell suggested that a rate cut could be on the table as soon as the Fed’s September meeting. He didn’t commit outright, but his tone leaned toward a cautious openness. He acknowledged the delicate balance the central bank faces: inflationary pressures remain a concern, but the job market is also showing signs of cooling. In his words, the stability in unemployment figures gives policymakers some breathing room, though the current restrictive stance of monetary policy may need to be adjusted if risks shift further.
Markets wasted no time responding. The S&P 500 jumped by about 1.6% following his remarks, while the Nasdaq gained nearly 2%. The Dow Jones Industrial Average climbed 2% to hit a record intraday high. Investors seemed eager to embrace the possibility of lower borrowing costs in the near future. Bond yields also dropped, with the two-year Treasury falling nearly 10 basis points and the benchmark 10-year yield sliding by six points. Even the U.S. dollar weakened against major currencies, reflecting the expectation of looser monetary policy.
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Powell’s comments carried added weight because this speech is widely seen as his last in the role of Fed Chair, with the White House signaling no plans to reappoint him. That backdrop added a layer of significance, as investors hung on every word for signs of where the Fed might steer next.
Beyond markets, Powell noted some of the challenges shaping the economy. He highlighted how tariffs introduced under President Trump have started to push up certain prices, while tighter immigration policies have slowed labor force growth. He pointed out that shifts in trade, tax, and regulatory policy could influence both economic growth and productivity in unpredictable ways. Distinguishing temporary, cyclical changes from long-term structural ones, he said, has become increasingly difficult.
Political tension surrounding the Fed also loomed in the background. Powell avoided mentioning the public clashes with the White House, including threats to fire him. Instead, he underscored the central bank’s mandate: fostering maximum employment and price stability. By framing his message around that commitment, he signaled continuity even amid external pressures.
For Wall Street, however, the headline was simple: a rate cut is now a live possibility. Stocks rallied, bond yields fell, and optimism replaced some of the worry that had built up over inflation and slowing growth. As one market analyst put it, fears of higher inflation were temporarily set aside, and investors are now looking ahead to what could be a more supportive environment for the economy this autumn.
All eyes now turn to September. The Fed may not have given a firm answer, but Powell’s careful words were enough to shift momentum, leaving traders with growing confidence that change is on the horizon.
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