Traders on the floor of the New York Stock Exchange on August 4, 2022.
Source: NYSE
Stocks rose on Friday after Federal Reserve Chairman Jerome Powell suggested an interest rate cut was imminent.
of Dow Jones Industrial Average It increased by 264 points, or 0.7%. S&P 500 It rose 0.6%. Nasdaq Composite Index It rose 0.9% thanks to strong performance from technology stocks.
Stocks rose after Powell hinted at future interest rate cuts in a speech in Jackson Hole, Wyoming, but did not offer specifics on the timing or size of any cuts to borrowing costs.
“The time has come to adjust policy,” Powell said at the Fed’s annual meeting, adding, “The direction to move is clear, and the timing and pace of rate cuts will depend on upcoming data, evolving outlook, and the balance of risks.”
Traders, who all expect a rate cut at the September meeting, were pleased with the outcome, according to CME Group’s FedWatch, but disagreed on the size of the cut.
Technology stocks rose especially strongly as investors grew hopeful that a low interest rate environment would benefit this group. Tesla Increased by more than 4% NVIDIA and Advanced Micro Devices They rose by more than 3% and 2%, respectively.
Small-cap stocks also rose on the outlook, Russell 2000 Increased by more than 2%.
“Powell’s comments created a lot of excitement among traders, even though many expected the Fed to say it was time to adjust,” said Naeem Aslam, chief investment officer at Zaie Capital Markets. “It shows how disadvantaged markets have been with high interest rates.”
The three major indexes are on track for a winning week despite some pressure Thursday from rising Treasury yields, with the Dow and S&P 500 each up about 0.7% and the Nasdaq Composite up 0.6%.