Wall Street experienced a surge on Friday as Federal Reserve Chair Jerome Powell signaled an imminent reduction in interest rates. The benchmark S&P 500 index was on the brink of hitting a record high following Powell’s remarks at the annual economic conference in Jackson Hole. This announcement prompted a positive reaction in the market, with the S&P 500 rallying close to 9.7% after a recent downturn.
Notable stocks such as Meta and Amazon.com saw a 1% increase, contributing to the overall rise in the market. Additionally, chip companies like Nvidia and Broadcom surged by over 3% each, further boosting stock indexes. The Dow Jones Industrial Average rose by 302.68 points, the S&P 500 gained 56.13 points, and the Nasdaq Composite increased by 255.03 points during the trading session.
Investors closely monitored Powell’s statements, as they anticipate a reduction in the federal funds rate at the upcoming Fed meeting in September. Traders have already priced in a 71.5% probability of a 25 basis points rate cut. Sam Stovall, chief investment strategist at CFRA Research, highlighted the market’s anticipation for a rate cut since March but cautioned against expecting a significant adjustment in rates.
The Fed’s minutes from the July meeting revealed a willingness among policymakers to consider rate cuts in response to slowing economic indicators. Recent data suggested a gradual slowdown in the U.S. economy, alleviating concerns of a severe downturn. This positive outlook contributed to the recovery of Wall Street’s major indexes after a turbulent period earlier in the month.
Workday shares surged by 11.2% after surpassing revenue expectations for the second quarter and announcing a substantial stock buyback plan. Cruise and Uber revealed a partnership to introduce autonomous vehicles on the ride-hailing platform, driving General Motors-backed Cruise’s stock up by 2.2%. Ross Stores also saw a 3.8% increase in its stock price after raising its profit forecast for fiscal year 2024.
Advancing issues significantly outweighed decliners in the market, with a notable 9.02-to-1 ratio on the NYSE and a 3.95-to-1 ratio on the Nasdaq. The S&P 500 index recorded 52 new 52-week highs, while the Nasdaq Composite witnessed 57 new highs and 25 new lows during the trading session.
Through Powell’s announcement and positive market response, Wall Street experienced a substantial rally and progress towards record highs, showcasing investor optimism and potential economic growth in the coming months.