Powell: Fed Could Cut Rates ‘as Soon as’ September Meeting – US Market Wrap

Federal Reserve Chair Jerome Powell’s dovish comments helped extend a stock rally that began with a surge in key technology companies, propelling the S&P 500 to its highest level since February.

Equities made a strong comeback, with the S&P 500 up more than 1.5%. Nvidia surged 13% following a positive analyst call. The world’s most valuable company added a record $329 billion in value, shattering the single-day record it had set several times in the previous months. Treasury yields fell across the curve, and the dollar weakened against all developed-market peers.

Powell stated that the Fed could cut rates “as soon as” September.
His comments came after the Federal Open Market Committee decided to keep the federal funds rate at 5.25% to 5.5%, where it has been since last July. Policymakers also made several changes to the language in a statement issued following their two-day meeting. Notably, the committee shifted to stating that it is “attentive to the risks to both sides of its dual mandate,” as opposed to previous language that focused solely on inflation risks.

The Nasdaq 100 gained 3%. A gauge of the “Magnificent Seven” megacaps rose 3.5%. The $22 billion VanEck Semiconductor Exchange-Traded Fund (ticker: SMH) rose 7.6%. The Russell 2000 index of small businesses rose 0.5%.

Treasury 10-year yields fell eight basis points, to 4.06%. Oil rose after Hamas claimed Israel assassinated its political leader, escalating geopolitical tensions. The yen strengthened as the Bank of Japan raised interest rates and announced plans to reduce bond purchases.