New York’s Dow Jones index rose by 1.89%, reaching a December peak of 45,631.74 points at the close of trading.
The Nasdaq was also up by 1.88%, closing at 21,496 points, while the S&P 500 advanced 1.52%, ending at 6,466 points.
“All eyes were on Mr. Powell’s speech, with the main takeaway being that it was more dovish than expected,” Angelo Kourkafas from Edward Jones told AFP.
Since the Jackson Hole central bankers’ conference in Wyoming, the Fed Chairman emphasized that a rapid decline in the U.S. labor market could justify easing monetary policy and interest rates.
The market reacted swiftly, with major U.S. indices rising, as Treasury yields fell, dragging the dollar down.
In the U.S. bond market, the two-year yield, which is highly sensitive to monetary policy changes, fell from 3.78% at Thursday’s close to 3.69% by 9:20 PM (Lisbon time).
The ten-year yield also dropped significantly, from 4.33% on Thursday to 4.25%.
“An interest rate cut in September is not necessarily guaranteed, but it indicates that the Fed is ready to lower rates, provided next month’s CPI inflation index doesn’t show a positive surprise,” explained Angelo Kourkafas.
The Fed is in a “delicate situation,” according to Jerome Powell, as new tariffs on imported goods begin to impact consumers, risking a resurgence of inflation.
However, Powell and the Fed’s policy committee members “are now more attuned to a labor market slowdown,” affirmed Angelo Kourkafas.
The majority of investors now anticipate a rate easing in September, according to CME’s FedWatch Tool.
Financial services stocks rose, including Goldman Sachs (+3.62%) and American Express (+3.57%).
Construction companies also welcomed the potential for lower credit costs for Americans: Mohawk Industries rose 7.28% and Builders FirstSource, 8.43%.
Elsewhere, chip and processor specialist Intel (+5.53%, to $24.80) gained ground after Donald Trump confirmed the company agreed to sell 10% of its shares to the U.S. government.
Video conferencing platform Zoom surged by 12.71% to $82.47 after releasing results and forecasts that exceeded market expectations, driven largely by its AI investments.
