His comments opened the door to a rate cut at the Fed’s September 16-17 meeting, although Powell stressed the importance of the jobs and inflation data that will be available by then.
“The Fed, or at least Powell, is tilting towards a more dovish stance in order to prop up the weakening jobs market. That’s actually a dovish shift that we see in the Fed policy that matches the recent market expectations,” said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.
“The fact that the Fed is now preparing to give the market that 25-basis point-rate cut, at least that they were expecting, is obviously creating a lot of euphoria,” she added.
Traders boosted bets on a September rate cut after Powell’s comments, now placing a nearly 90% chance of a reduction, versus about 75% before Powell’s remarks.
At 01.57 pm the Dow Jones Industrial Average rose 887.83 points, or 1.99%, to 45,680.14, hitting an all-time high.
The S&P 500 gained 102.14 points, or 1.61%, to 6,472.31 and the Nasdaq Composite gained 421.85 points, or 2%, to 21,520.79.
Ten of the 11 S&P 500 sub-sectors traded higher, with consumer discretionary jumping almost 3%, while the communication services climbed 2.3%.
The Philadelphia SE Semiconductor Index soared 3.3%, while most megacap growth stocks also jumped. Tesla led gains with a 5.7% rise.
The rate-sensitive Russell 2000 Index surged 3.9%, hitting its highest level so far this year.
If current gains hold, the S&P 500 is set to snap a five-day losing streak after a broad selloff in heavyweight technology stocks pressured US equities this week.
The Dow and the S&P 500 were on track for mild weekly gains, while the Nasdaq was set for marginal weekly declines.
US stocks have rebounded sharply from April lows – when markets were rattled by president Donald Trump’s tariff announcements. Recently, indexes have been getting back up to record highs.
A spate of resilient earnings, optimism around trade deals and growing chances of interest-rate cuts have been some of the main gain drivers, although some concerns persist.
“Investors are cheering Powell’s comments like it’s the start of a rate-cut parade. But one cut won’t move the needle on consumer spending. The bigger question is whether this marks a true pivot in Fed policy – or if rising tariffs will force it to slam the brakes before that shift even begins,” said Zak Stambor, senior analyst for retail and ecommerce at Emarketer.
Earlier in the day, UBS Global Wealth Management lifted its year-end target for the S&P 500 for the second time in two months, betting on corporate earnings strength, easing trade tensions and expectations of interest-rate cuts.
Among other top movers, Intuit dropped 4.8% after the TurboTax-maker forecast first-quarter revenue growth below analysts’ estimates due to weak performance at its Mailchimp marketing platform.
Workday shed 3.2% after the human resources software provider provided an in-line outlook for the current quarter.
Advancing issues outnumbered decliners by a 10.61-to-1 ratio on the NYSE. There were 520 new highs and 39 new lows on the NYSE.
The S&P 500 posted 35 new 52-week highs and no new lows while the Nasdaq Composite recorded 152 new highs and 40 new lows.