Wall St. rises over 1% after Powell hints at September rate cut
On Friday, the primary indices of Wall Street experienced an increase exceeding 1 percent, following remarks from US Federal Reserve Chair Jerome Powell, who indicated a potential interest-rate reduction at the upcoming policy meeting during his address at the Jackson Hole Symposium. Powell’s remarks have signaled a potential for a rate cut during the Fed’s September 16-17 meeting, while simultaneously emphasizing the critical nature of the employment and inflation statistics that will be released prior to that date.
“Chair Powell was able to talk about the balance of risk shifting and therefore the potential… shifting of policy would be appropriate,” stated Art Hogan, chief market strategist at B Riley Wealth. “Emphasizing that the underlying weakness in the labor market is the primary factor, rather than apprehensions regarding the core goods price hikes attributed to tariffs… the unmistakable signal to the market is that September is now very much in play.” Following Powell’s comments, traders have increased their expectations for a September rate cut, now estimating a nearly 90 percent probability of a reduction, compared to approximately 75 percent prior to Powell’s remarks.
Dow Jones Industrial Average experienced an increase of 667.07 points, representing a 1.49 percent rise, reaching a new all-time high of 45,452.57. The S&P 500 experienced an increase of 86.80 points, translating to a rise of 1.36 percent, reaching a level of 6,456.97. Meanwhile, the Nasdaq Composite saw an advancement of 352.99 points, equivalent to a 1.67 percent gain, culminating at 21,453.31. All 11 S&P 500 sub-sectors experienced upward movement, with the rate-sensitive real estate sector increasing by 1.8 percent, while consumer discretionary saw a rise of nearly 2 percent.
An index that monitors chip stocks experienced an increase of 3.7 percent, with a corresponding rise in the majority of megacap growth stocks. Tesla experienced a notable increase, rising by 5.2 percent. If current gains hold, the S&P 500 is poised to end a five-day losing streak following a widespread selloff in major technology stocks that has exerted pressure on US equities this week. The Dow and the S&P 500 appear poised for modest weekly gains, whereas the Nasdaq is anticipated to experience slight weekly declines. US stocks have experienced a significant recovery from their April lows, a period during which markets were unsettled by President Donald Trump’s trade tariff announcements. Recently, they have been approaching record highs once again.
A series of robust earnings reports, positive sentiment regarding trade agreements between the US and its trading partners, and increasing probabilities of interest rate reductions have been key factors driving gains. Earlier in the day, UBS Global Wealth Management revised its year-end target for the S&P 500 upward for the second time in two months, citing confidence in the robustness of corporate earnings, a reduction in trade tensions, and anticipations of interest-rate cuts. In the context of market dynamics, Intuit experienced a decline of 6.2 percent following its forecast for first-quarter revenue growth, which fell short of analysts’ expectations. This downturn is attributed to underwhelming performance at its Mailchimp marketing platform.
Workday experienced a decline of 4.4 percent following the release of its outlook for the current quarter, which aligned with market expectations. On the NYSE, advancing issues surpassed decliners with a ratio of 12.14-to-1, while on the Nasdaq, the ratio stood at 6.3-to-1. The S&P 500 achieved 21 new 52-week highs with no new lows, whereas the Nasdaq Composite noted 101 new highs alongside 30 new lows.
