The US stock market jumped on Friday after Federal Reserve Chair Jerome Powell hinted that interest rate cuts could happen soon. This excited investors and gave markets a strong boost.
The S&P 500 rose 1.6%, ending its six-day losing streak and moving close to its record high from last week. The Dow Jones Industrial Average surged by 890 points (2%) and looked ready to beat its December record. The Nasdaq also climbed 1.9%.
Brian Jacobsen, chief economist at Annex Wealth Management, joked that it was a “Ka-Powell” moment, saying the Fed was not going to spoil the market party.
Powell explained that while inflation is still a concern (especially with tariffs pushed by President Trump), the job market is strong enough to allow the Fed to move carefully with interest rates. Investors took this as a big sign that the Fed may cut rates in September.
Market data showed the chance of a September rate cut jumped to 91%, up from 75% the day before. Treasury yields fell sharply, with the 10-year dropping to 4.26% and the 2-year down to 3.69%.
Which stocks gained the most?
- Small companies: The Russell 2000 index jumped 3.8%.
- Homebuilders: Lennar, PulteGroup, and D.R. Horton all rose nearly 5%.
- Travel companies: Norwegian Cruise Line gained 6.4%, Delta Air Lines 6.2%, and Caesars Entertainment 6%.
- Nio: The electric carmaker’s stock shot up 13.3% after starting pre-sales of its ES8 SUV in the US.
- Nvidia: Rose 1.4% after CEO Jensen Huang said the company is working with the Trump administration on a special China-only GPU design.
Global markets also moved higher: Germany’s DAX gained 0.4% despite weak economic data, Shanghai’s market rose 1.4%, and South Korea’s Kospi climbed 0.9%.
