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 indicated that interest rate cuts are on the horizon.
The Dow Jones Industrial Average 350 points or 0.9% higher. The S&P 500 1% earned. The Nasdaq Composite Technology stocks outperformed, advancing 1.4%.
Stocks rose after Powell signaled that interest rates would be cut during a speech he gave in Jackson Hole, Wyoming. But Powell did not provide specifics on when, or how big, any reduction in borrowing costs would be.
“The time has come to adjust policy,” Powell said during the Fed’s annual retreat. “The direction of travel is clear, and the timing and pace of rate cuts will depend on incoming data, the evolving outlook and the balance of risks.”
Traders were happy to bet unanimously on a rate cut at the September meeting, according to CME Group. FedWatch. But there is less consensus on how large that decrease will be.
Technology stocks rallied with particular strength as investors grew optimistic that the low-rate environment would benefit the group. Tesla Up more than 4% Nvidia And Advanced Micro Devices rose over 3% and 2% respectively.
Small-cap stocks also benefited from this outlook Russell 2000 Advances above 2%.
Powell’s comments have buoyed traders, but many expect the Fed to adjust,” said Naeem Aslam, chief investment officer at Zaye Capital Markets. “It shows how much the market is lagging because of higher interest rates.”
The three major averages are headed for a successful week despite some pressure from Treasury yields on Thursday. The S&P 500 and Nasdaq are now up 1.2% and 1.3% for the week, respectively, while the Dow has added 0.9%.
