NEW YORK, Aug. 23 (Xinhua) — U.S. stocks ended higher on Friday, after Federal Reserve Chair Jerome Powell sent a strong signal that interest rate cuts could be forthcoming.
The Dow Jones Industrial Average rose 462.30 points, or 1.14 percent, to 41,175.08. The S&P 500 added 63.97 points, or 1.15 percent, to 5,634.61. The Nasdaq Composite Index increased 258.44 points, or 1.47 percent, to 17,877.79.
All of the 11 primary S&P 500 sectors ended in green, with real estate and consumer discretionary leading the gainers by adding 2.00 percent and 1.70 percent, respectively. Consumer staples posted the weakest growth, up by 0.23 percent.
Stocks gained momentum on Friday morning following Powell’s speech in Jackson Hole, where he hinted at future interest rate reductions. However, Powell did not specify the timing or magnitude of these potential cuts.
“The time has come for policy to adjust,” Powell said during the Fed’s annual gathering. “The direction of travel is clear, and the timing and pace of rate cuts will depend on incoming data, the evolving outlook, and the balance of risks.”
Powell has become more assured that inflation will return to the Fed’s 2 percent target. However, after months of gradually increasing unemployment, he also echoed economists’ concerns that the labor market has presented a growing risk compared to inflationary pressures. “We do not seek or welcome further cooling in labor market conditions,” Powell said.
“The market is kind of breathing a sigh of relief” after Powell and other Fed speakers, said Skyler Weinand, chief investment officer at Regan Capital.
“The market sees: ‘All right, the cycle has changed,'” he said. “We haven’t taken a 180 per se, but we’ve taken a right turn towards an easing cycle.”
Chicago Fed President Austan Goolsbee praised Powell’s speech but refrained from endorsing the September interest rate cut that markets anticipate. “The spirit of Chair Powell’s speech, this is the moment. Everything that we’ve been waiting to happen, this is the path to that.”
Besides Powell’s speech, new home sales in the United States surged in July, reaching an adjusted annualized rate of 739,000, the highest since May 2023, according to the Census Bureau on Friday. This rate significantly exceeded an estimate of 620,000, as well as the revised June figure of 668,000.
