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US stock markets advanced on Friday after Federal Reserve Chair Jerome Powell signaled that policymakers may cut interest rates at the central bank’s September 16 and September 17 meetings. His remarks at the Jackson Hole Symposium acknowledged growing risks to the labor market while warning that inflation pressures remained.
The Dow Jones Industrial Average climbed 1.8% by mid-morning, reaching an intraday record high. The S&P 500 gained 1.6%, while the NASDAQ Composite added 1.8%. All three indexes moved higher after a week of losses, putting the S&P 500 on track to end a five-day slide.
Trading activity reflected strong gains in rate-sensitive sectors. Real estate rose 1.8%, while consumer discretionary stocks advanced nearly 2%. Chipmakers also rallied, with the semiconductor index up 3.7%. Tesla led the megacap technology group, rising more than 5%.
Powell emphasized the importance of upcoming data on jobs and inflation in guiding policy but indicated the Fed is prepared to act if conditions weaken further. Markets reacted quickly, with futures pricing in nearly a 90% chance of a September cut, compared with about 75% before his speech.
Strategists said that Powell similarly sounded more dovish than he had in July, as the economy showed more signs of labor-market softness. Nevertheless, he was wary of longstanding price pressures, especially in tariff costs. The balance indicated that, although a reduction next month is probable, there is still uncertainty over the prospect of further easing later on in the year.
UBS Global Wealth Management raised its year-end target for the S&P 500 for the second time in two months, citing corporate earnings strength, reduced trade tensions, and expectations of lower borrowing costs. Analysts said such conditions could continue supporting equities into the final quarter of the year.
Corporate earnings and forecasts influenced several notable stock moves during the session. Intuit shares fell 6.2% after the company projected first-quarter revenue growth below analysts’ estimates, pointing to weaker performance in its Mailchimp unit. Workday dropped 4.4% after issuing an in-line quarterly outlook.
Meanwhile, smaller and more speculative stocks benefited from the shift in sentiment. The Russell 2000 surged by 3.6%, and indexes that tracked highly shorted and profitless stocks rallied sharply. These trends suggested that investors may be willing to retreat again into riskier corners of the market following Powell's remarks, which lifted sentiments of eased conditions by monetary policy.
At the same time, despite the rally, market participants mentioned caution. Analysts pointed out that valuations are already high and that September is traditionally a weaker month in stocks. Nevertheless, Powell also calmed traders by signalling that the Fed is willing to act on evidence of an economic slowdown, giving confidence that policy would be supportive in the near term.
Also Read: US Stock Market Today: Dow Jones Rises 0.4%, Nasdaq 100 Drops 1%, Palo Alto Gains 16%
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