Wall Street ended the week on a strong note as the Dow Jones Industrial Average surged more than 800 points to a record close, fuelled by remarks from Federal Reserve Chair Jerome Powell that signalled the central bank could begin easing policy as early as next month.
The Dow gained 846.2 points, or 1.9%, finishing at an all-time high of 45,631.7. The S&P 500 advanced 96.7 points, or 1.5%, to close at 6,466.9, while the Nasdaq Composite climbed 396.2 points, or 1.9%, to settle at 21,496.5.
Technology shares spearheaded the rally, with megacap names staging sharp gains. Nvidia rose 1.7%, Alphabet added 3.2%, Meta Platforms lifted 2.1%, and Amazon advanced 3.1%.
The gains came after Powell’s closely watched speech at the Federal Reserve’s annual Jackson Hole symposium.
In his address, Powell said “the baseline outlook and the shifting balance of risks may warrant adjusting our policy stance”, suggesting that the Fed’s dual mandate of maximum employment and price stability may now justify a shift toward easing.
He also cited “sweeping changes” in tax, trade and immigration policies as part of the backdrop influencing the central bank’s outlook.
Market expectations for a quarter-point rate cut in September jumped to 84.1%, up from 75% last week, according to the CME Group FedWatch Tool.
The rally contrasted with the downbeat tone that dominated markets earlier in the week, when megacap technology shares had come under pressure.
The rebound on Friday allowed the S&P 500 and Dow to recover much of those losses. For the week, the Dow rose 1.5%, the S&P 500 gained 0.3%, while the Nasdaq slipped 0.6%.
Bond yields also moved lower as investors priced in policy easing. The benchmark 10-year Treasury yield fell 1.7% to 4.256%, while the 2-year yield declined 2.4% to 3.698%.
