Stocks closed significantly higher on Friday after Federal Reserve Chair Jerome Powell signaled a possible interest rate cut during a high-profile speech at an annual gathering in Jackson Hole, Wyoming.
The Dow Jones Industrial Average closed up 846 points, or 1.8%, while the S&P 500 climbed 1.5%. The tech-heavy Nasdaq increased 1.8%.
MORE: Fed Chair Powell says inflation, hiring slowdown pose ‘challenging situation’
Some major tech stocks were among the top performers on Friday. Shares of Intel climbed 5% after President Donald Trump said the California-based chipmaker had agreed to let the U.S. government take a 10% stake in the firm. As of late Friday afternoon, Intel had not confirmed the agreement.
Tesla shares jumped 6%, while Delta Air Lines rose 6%.
Addressing policymakers and reporters, Powell said the Fed would “proceed carefully” but he hinted at the possibility of a change to interest rates in light of a hiring slowdown over recent months. “The shifting balance of risks may warrant adjusting our policy stance,” Powell said.
Minutes after the speech, investors pegged the chances of a quarter-point interest rate cut at 91%, up from a 75% chance assessed one day earlier, according to CME FedWatch Tool, a measure of market sentiment.
Despite the market’s positive reaction to Powell’s speech, the Fed chair voiced a note of caution for the outlook of the U.S. economy.
Powell said said the central bank faces a “challenging situation” as a hiring slowdown coincides with tariff-driven price increases, putting pressure on both sides of the Fed’s dual mission to maximize employment and control inflation.
For months, President Donald Trump has urged the Fed to lower interest rates in an effort to boost economic performance and reduce interest payments on government debt. So far, the Fed has refused, opting to hold interest rates steady as policymakers observe the effects of tariffs.
