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Markets Soar After Fed Chair Hints at Rate Cut
Wall Street celebrated Friday as Federal Reserve Chair Jerome Powell suggested the possibility of an interest rate cut during his address at the annual Jackson Hole economic symposium. The Dow Jones Industrial Average surged 846 points, a 1.8% increase, while the S&P 500 climbed 1.5%. The tech-heavy Nasdaq also saw a healthy 1.8% gain.
Tech stocks were among the day’s biggest winners. Intel shares jumped 5% following President Trump’s claim that the company had agreed to a 10% government stake, although Intel has yet to confirm this. Tesla and Delta Air Lines both saw their shares rise by 6%.
Powell told attendees the Fed would “proceed carefully” but acknowledged a potential need for a rate adjustment due to recent slowing job growth. “The shifting balance of risks may warrant adjusting our policy stance,” he stated. Investors reacted swiftly, with market predictions of a quarter-point rate cut jumping to 91%, up from 75% the previous day.
Despite the market’s enthusiasm, Powell cautioned about the overall U.S. economic outlook. He described the central bank’s current position as “challenging,” citing the combination of slowing job growth and tariff-related price hikes as creating a difficult balancing act for the Fed’s dual mandate of maximizing employment and controlling inflation.
The Fed’s potential move comes after months of pressure from President Trump, who has been advocating for lower interest rates to stimulate the economy and lessen the burden of government debt interest payments. Until now, the Fed has resisted these calls, maintaining a steady interest rate policy while assessing the impact of ongoing tariffs.