Wall Street closed out this week with a surge that wiped out most of August’s usual misery, after Jerome Powell dropped what may be his final comments from Jackson Hole, confirming the Federal Reserve is leaning toward cutting interest rates in mid-September.
That speech, delivered Friday in Wyoming, sent stocks flying across every sector, including tech, semiconductors, small caps, and regional banks. It gave investors what they’ve been waiting on for weeks — a clear signal that monetary policy is about to loosen.
“Powell delivered a final Jackson Hole speech to be remembered,” said Sam Stovall, chief investment strategist at CFRA Research. “He essentially gave investors what they had been hoping for, which was a dovish outlook on future Fed policy.”
Sam added, “It has removed an important restraint that was tied to investor optimism. In that the Fed now seems fairly clear that they will, or are leaning toward, cutting rates in mid-September.”
Markets react to Powell’s comments and Nvidia’s upcoming earnings
On Friday, the Dow Jones Industrial Average jumped more than 900 points, or about 2%, during intraday trading, enough to register a new all time high, as Cryptopolitan reported earlier.
The Russell 2000 surged by over 3%, and the S&P 500 Equal Weight Index broke past its previous high set in November 2023, according to data from CNBC.
Semiconductors shot higher, regional banks moved; even large-cap tech saw a big snapback. The Magnificent Seven had their best session since May, with nearly $370 billion in market value added by the close, roughly the same size as Procter & Gamble.
The next test for this rally hits next week when Nvidia releases earnings. Analysts expect the chipmaker to beat expectations again, as it has throughout the artificial intelligence boom.
But these results are coming at a tense moment. The company’s exposure to China has become a problem, thanks to policy moves under President Donald Trump’s administration and regulatory pushback from Beijing.
Nvidia CEO Jensen Huang confirmed on Friday that he is now talking with the U.S. government about shipping a different version of its H20 chip to China, one that complies with updated export controls.
Nvidia is also preparing to give 15% of its China chip revenue to the U.S. government in return for a license to keep selling there. Despite the geopolitical risk, analysts are still bullish. Harsh Kumar, semiconductor analyst at Piper Sandler, said, “We anticipate a meaningful uptick in estimates on the Street for Nvidia, when these earnings are done.” Harsh still maintains a buy rating on the stock.
July inflation data could support September rate cut
Also landing next week is the July Personal Consumption Expenditures (PCE) price index, which the Fed uses as its preferred measure of inflation. Economists expect core PCE to rise 2.9% year-over-year, just slightly above June’s 2.8% reading. This uptick is expected to reflect new costs coming from tariffs, but nothing that would derail the case for a rate cut.
Even if inflation edges higher, Wall Street doesn’t seem too worried. Sam said, “Investors are well aware of short-term hurdles. So, next week, I think, should end up being a positive week.” With Powell’s tone already leaning dovish, and signs of cooling inflation, markets look ready to brush off minor bumps.
As of Friday, the Dow is up over 3%, leading the major indexes. The S&P 500 has gained 2%, while the Nasdaq Composite, home to the big tech names, is lagging behind with a rise of just over 1%. Even that gain is notable, given the pressure tech stocks have faced all month.
With Powell’s speech behind them, Nvidia’s report on deck, and inflation data coming soon, traders are betting August could close out a winner for once.
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