Dow Jumps 732 Points as Powell Signals Possible Fed Rate Cuts

Jerome Powell, the head of the Federal Reserve, stated on Friday that the central bank might be getting closer to cutting interest rates. This caused stocks in the U.S. to rise dramatically. After weeks of trading that was all over the place and worries about inflation, this made a lot of people feel better.

Finabase’s market data shows that the Dow Jones Industrial Average went up 732 points, or 1.6%, to 45,512.25. The S&P 500 rose 1.2%, and the Nasdaq Composite rose 1.3%.

The rise happened after Powell spoke at the Federal Reserve’s annual meeting in Jackson Hole, Wyoming. He also indicated that the policy is still in a tight spot and that the risks between the Fed’s aims for inflation and employment are changing. Traders quickly revised their minds on what the central bank would do with interest rates. This helped stocks bounce back after they had fallen.

The speech made it more likely that rates would go down. The prices of futures contracts showed that investors think there is a substantial chance that the Fed would cut interest rates by a quarter point at its meeting in September. They believe this because they expect that officials will be more lenient if GDP keeps falling.

When the main shifts transpired, the leaders shifted. This year, small-cap and value companies did better than the giant tech companies that have been leading the way. Investors bought more than 1% of stocks in the banking, industrial, and energy sectors in case interest rates fell. Some of the biggest tech stocks still went up, but as investors sold their shares, the group lagged behind the rest of the market.

The S&P 500 and Nasdaq stayed down all week, with the S&P 500 down approximately 0.9% and the Nasdaq down almost 2%. This indicates how unstable the market has been lately since people are worried about prices and inflation. The Dow rose 0.3% over the week, which suggests that cyclical stocks are getting more popular.

Powell’s speech, which was possibly one of his final important ones as chair, seems to be meant to keep things open and reassure investors that the government is keeping up with how things are changing. The news was beneficial for the markets, which had been anxious that rates would stay high for a long time. This meant that cuts were more likely if the facts were right.

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