Stock market today: Nasdaq leads stock climb as Powell says 'time has come' to begin cutting interest rates
08/23/2024 21:27
Investors are bracing for a pivotal speech by Fed Chair Jerome Powell that is likely to shape expectations on policy, the economy, and the future path of interest rates.
Stocks climbed on Friday as Federal Reserve Chair Jerome Powell said the "time has come" to begin cutting interest rates, offering the clearest signal yet that the central bank is prepared to begin an easing cycle, with major implications for the economy.
The S&P 500 (^GSPC) rose 1%, while the Dow Jones Industrial Average (^DJI) added 0.9%, or over 300 points. The tech-heavy Nasdaq Composite (^IXIC) led gains, up roughly 1.5%, as all three gauges eyed a strong comeback from Thursday's closing losses.
Spirits turned buoyant as a day of reckoning for rate-cut bets finally arrived, after a week of mounting anticipation for what Powell would reveal during a speech Friday morning at Jackson Hole.
Speaking at the Kansas City Fed's annual economic symposium in Jackson Hole, Powell said: "The time has come for policy to adjust."
"The direction of travel is clear," Powell added, "and the timing and pace of rate cuts will depend on incoming data, the evolving outlook, and the balance of risks."
Slowing economic data has convinced the market to position for the Fed to lower rates in September, with opinion divided on the depth of the cut. Traders are pricing in around a 70% chance of a reduction of 25 basis points and 30% odds of 50 basis points, per CME's FedWatch tool.
Read more: Fed predictions for 2024: What experts say about the possibility of a rate cut
The benchmark 10-year Treasury yield (^TNX) was down to around 3.8% in the wake of Powell's comments, near its lows of the year.
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Federal Reserve Chair Jerome Powell sent a straightforward message to markets in a key speech on Friday, saying "the time has come" for the central bank to begin lowering interest rates.
Markets reacted with a surge of gains, as investors welcomed the news of a coming easing cycle.
Speaking at the Kansas City Fed's annual economic symposium in Jackson Hole, Powell said: "The time has come for policy to adjust," reports Yahoo Finance'sMyles Udland and Jennifer Schonberger
"The direction of travel is clear," Powell added, "and the timing and pace of rate cuts will depend on incoming data, the evolving outlook, and the balance of risks."
Powell's speech comes just over three weeks out from the Fed's Sept. 17-18 meeting, which should see the central bank announce its first interest rate cut since 2020.
Powell acknowledged recent softness in the labor market in his speech and said the Fed does not "seek or welcome further cooling in labor market conditions."
Stocks open higher ahead of speech from Fed Chair Powell
All three major stock indexes were poised for a bounce back on Friday, as spirits lifted on Wall Street ahead of a major speech from Federal Reserve Chair Jerome Powell. The remarks are expected to touch on broad economic points but could shape near-term expectations on the future path of interest rates.
The S&P 500 (^GSPC) rose 0.6%, while the Dow Jones Industrial Average (^DJI) added 0.4%. The tech-heavy Nasdaq Composite (^IXIC) led gains, up roughly 0.8%.