Stocks surged Friday as investors breathed a huge sigh of relief after Federal Reserve Chair Jerome Powell indicated that interest rates could be cut.
The Dow Jones Industrial Average (DJI) jumped 1.9%, or about 850 points, hitting a record closing high for the first time since last December. The benchmark S&P 500 index (SPX) rose 1.5%, snapping a five-day losing streak and closing just shy of its own record high, while the tech-heavy Nasdaq Composite (IXIC) added 1.9%.
Stocks had been under pressure all week as investors anxiously awaited Powell’s speech from the Jackson Hole Economic Policy Symposium, an annual gathering of central bankers from around the world. Thanks to Friday’s rally, the Dow and S&P 500 managed to post weekly gains of 1.5% and 0.3%, respectively, rising for the third consecutive week. The Nasdaq finished the week down 0.6%, after being on pace for its worst week since May at the start of the day.
Powell said this morning that the “shifting balance of risks may warrant adjusting our policy stance.” While inflation risks persist as tariffs work their way through the economy, the downside risks in the labor market have risen, he said. Powell’s confirmation that rate cuts could be coming—after the Fed has stood pat throughout 2025—is a welcome development for market participants, who have been pricing in the likelihood of a policy adjustment starting in September. The news sparked a resurgence in investor appetite for risk today.
