Almost Breaking Records, Dow Soars Over 900 Points As Powell Opens Door To Rate Cuts

Stocks surged Friday, with the Dow Jones Industrial Average climbing 915 points, or 2.04%, to a record high after Federal Reserve Chair Jerome Powell signaled that interest rate cuts may soon be on the way. The S&P 500 rose 1.58% and the Nasdaq Composite gained 1.87%.

Powell, speaking at the annual central banking forum in Jackson Hole, Wyoming, said that risks to the job market are growing. “The baseline outlook and the shifting balance of risks may warrant adjusting our policy stance,” he said, adding that “downside risks to employment are rising.”

Wall Street had expected Powell to be more cautious, but his comments sparked an immediate rally. “Investors are enthusiastic that the Fed will likely resume its easing cycle next month,” José Torres, senior economist at Interactive Brokers told CNN.

Bonds also rallied as investors anticipated lower rates, driving Treasury yields down. Traders are now pricing in an 89% chance of a September rate cut, up from 75% before Powell’s remarks.

Market strategists described Powell’s tone as distinctly “dovish,” suggesting the Fed is ready to cut rates to support growth. “Stocks are surging and the yield curve is plunging as Chair Powell points to potential rate cuts around the corner,” Torres said.

The Fed has held interest rates steady since December, but a cut would make borrowing cheaper and encourage more investment — a move investors see as fuel for a continued rally into year’s end.