Powell’s Dovish Tone Sparks Wall Street Rally

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Wall Street traders got the news they had been waiting for on Friday: the U.S. Federal Reserve may be ready to cut interest rates again. Fed Chair Jerome Powell, speaking at the closely watched Jackson Hole economic symposium, hinted that the central bank could soon adjust its stance to support growth, sparking a surge across markets.

The reaction was swift. U.S. stocks jumped, with the S&P 500 rising 1.5% to end just shy of a record high. Smaller companies also benefited, with the Russell 2000 climbing nearly 4%. Bond markets rallied, pushing two-year Treasury yields down by as much as 12 basis points, while the U.S. dollar slipped. Investors also flocked to riskier assets, Bitcoin gained ground and gold rose 1%.

Powell’s remarks came after weeks of speculation that the Fed would lower rates in September, possibly by a quarter percentage point. Some traders are even betting on a larger half-point cut, reflecting concerns about a slowing job market and weaker economic momentum. If delivered, it would mark the first rate reduction since December.

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The upbeat market reaction offered relief after a rocky stretch. Earlier in the week, stocks had stumbled as inflation data showed wholesale prices climbing at the fastest pace in three years, raising worries that high prices could tie the Fed’s hands. That uncertainty had ended a weeks-long rally powered by booming tech stocks, particularly companies like Nvidia that have ridden the wave of artificial intelligence spending.

For now, Powell’s dovish tone has reassured investors that the Fed stands ready to act. But questions remain about whether slowing economic growth could weigh on corporate earnings in the months ahead.