Wall Street’s stock indexes soared on Friday, thanks to Federal Reserve Chair Jerome Powell’s remarks about the necessity of reducing interest rates. The S&P 500 index approached a record high, hinting at a favorable outlook for investors. Powell’s endorsement of imminent policy easing, given the risks in the job market and the approaching inflation target of 2%, led to a surge in the market. This bolstered the S&P 500 and other major indexes, with some stocks like Meta and Amazon.com contributing significantly to the rally. The Dow Jones Industrial Average, S&P 500, and Nasdaq Composite all posted notable gains, showcasing the positive impact of Powell’s comments on the stock market.
Megacap growth names like Meta and Amazon.com witnessed a 1% increase, boosting the S&P 500 index. Furthermore, chip stocks such as Nvidia and Broadcom saw gains of more than 3% each, further solidifying the market’s positive momentum. Technology stocks advanced by 1.4%, with the Philadelphia chip index surging by 2.2%. This trend indicated a robust performance by the technology sector, underlining the significance of these stocks in driving the overall market sentiment post-Powell’s comments.
The market’s positive response to Powell’s comments reflected optimism about the Federal Reserve potentially lowering its benchmark interest rate. Atlanta Fed President Raphael Bostic hinted at an upcoming rate cut, setting the stage for the Fed’s meeting in September. Traders projected a 71.5% likelihood of a 25 basis point rate cut, adding to the market’s anticipation. Despite previous disappointments, investors remained hopeful about the Fed’s forthcoming decision, with CFRA Research’s chief investment strategist emphasizing the nuanced approach the Fed might adopt. This cautious optimism underscored the market’s expectations and the likely impact of the Fed’s decisions on stock indexes in the near future.
Apart from the broader market trends, individual companies also experienced significant movements post-Powell’s comments. Workday shares surged by 11.2% following better-than-expected second-quarter revenue and a substantial stock buyback plan. In another development, Cruise announced its partnership with Uber to offer autonomous vehicles on the ride-hailing platform, propelling General Motors-backed Cruise and Uber’s stocks. Ross Stores also saw a 3.8% increase after raising its profit forecast for fiscal 2024. These individual company movements added to the overall market momentum, reflecting the diverse impacts of Powell’s comments across different sectors.
Overall, the market sentiment post-Powell’s comments was largely positive, with advancing issues outnumbering decliners by a significant margin. The S&P 500 and Nasdaq Composite recorded new highs, indicating a bullish trend in the market. The recovery from earlier downturns and the cautious optimism surrounding the Fed’s potential rate cut showcased a favorable outlook for investors. As the market gears up for the Fed’s meeting in September, investors remain watchful of further developments and their implications on stock indexes.