Stocks surged on Friday following Federal Reserve Chair Jerome Powell's signal that interest rate cuts are imminent. The Dow closed 462 points higher, the S&P 500 gained 1.2%, and the Nasdaq Composite added 1.5%, with all major indexes ending the week on a positive note.
Powell indicated at an economic summit in Jackson Hole, Wyoming, that the time has come to adjust policy, with rates currently at a 23-year high. He emphasized that the labor market cooling won't drive inflation higher and that the central bank aims to avoid further weakening in job market conditions.
The Fed's July meeting minutes revealed that a rate cut in September is likely if inflation continues to slow down. Concerns about softening job growth and cooling inflation have led to expectations of rate cuts in September, November, and December.
While there's speculation about a half-point cut next month, investors believe it's unlikely given the current economic data. The recent weak job growth and cooling inflation have raised fears of a recession, but experts suggest that the economy is experiencing a growth scare rather than heading into a downturn.
Gold futures hit a record high before retreating, while US existing home sales grew last month after a four-month decline. Target shares rose after reporting increased profits, while Macy's shares fell due to lower sales and reduced revenue guidance. Boeing shares declined after discovering issues in its 777X aircraft during a test flight.
