Technology stocks rallied particularly strongly as investors grew optimistic that a lower rate environment would benefit this group. Nvidia and Tesla are up around 4%,
Wall Street is trading in the green this Friday after Federal Reserve Chairman Jerome Powell indicated that interest rate cuts are on the horizon.
The Dow Jones industrial average rose 417 points, or 1%. The S&P 500 gained 1.4%. The Nasdaq Composite advanced 1.5%. While the wave was green for the entire New York market, the technology sector as a whole was driving the rise with almost 2%. Followed by the consumer staples sector with 1.6% and the real estate sector with 1.4%.
Powell’s words
Powell signaled from Jackson Hole that future interest rate cuts are on the way. However, he did not provide specific information on when or how large those cuts in borrowing costs would be. “The time has come to tighten policy,” Powell said during the Federal Reserve’s annual retreat. “The direction is clear, and the timing and pace of rate cuts will depend on incoming data, the evolving outlook, and the balance of risks.”
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Federal Reserve
That pleased traders, who are unanimously betting on a rate cut at the September meeting, according to CME Group’s FedWatch. But there is less consensus on how big that cut will be.
Small-cap stocks also gained on the outlook, with the Russell 2000 advancing more than 2%.
“Powell’s comments have generated a lot of excitement among traders, even though many were expecting the Fed to say that it was time to tighten,” said Naeem Aslam, chief investment officer at Zaye Capital Markets. “This shows how much the market has been starved due to high interest rates.”
All three major indexes are on track for a winning week despite some pressure on Thursday from rising Treasury yields. The S&P 500 and Nasdaq are up about 1.2% and 1.3%, respectively, on the week, while the Dow is up 0.9%.
Source: Ambito
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