Powell Confirms Rate Cuts: Why a Huge Stock Rally Is Coming

For years, Americans have endured one of the fastest and most furious rate hike cycles in modern history. But today, thanks to US Federal Reserve Board Chairman Jerome Powell, they can finally breathe a sigh of relief.

That’s because this morning, at a highly anticipated conference in Jackson Hole, Wyo., Powell confirmed that the Fed is indeed prepared to cut interest rates. And we believe that in doing so, he gave the stock market the “green light” to hit all-time highs in the blink of an eye.

In fact, that rally has already started. As of this writing, S&P 500 rose about 1% on the day in response to this morning’s commentary.

So… what exactly did Powell say? Why is it giving stocks the go-ahead for the rocket? And what stocks should you buy right now to prepare for those market gains?

Let’s get into it.

Why Powell inspired the market today

While Chairman of the Board Jerome Powell addressed several important topics in his Jackson Hole speech, we would argue that the most pertinent takeaway is this: “The time has come for politics to adapt.”

Throughout 2022 and ’23, the US Federal Reserve raised interest rates in the fastest hiking cycle in nearly 50 years. And for most of 2024, it kept rates high to ensure it beat inflation.

But inflation has largely been wiped out, which Powell acknowledged in his remarks this morning. He also noted that the labor market is weakening and that interest rates are currently too high, strongly implying that the Fed is (finally) ready to cut rates for the first time since the start of the COVID-19 pandemic.

Why does this matter?

Well, high interest rates have stifled economic activity, and lower rates will revive it. Consider: The housing market has frozen due to current mortgage rates. High car finance rates prevent most people from buying cars. Not many people remodel or shell out cash on huge appliances, all because of the exorbitant financing rates. The economy has been stalled since this rate hike cycle began.

Now the Fed is ready to cut those rates. That means all financing rates will drop. More people will be able to afford things like appliances, cars and houses. In turn, that will revive the economy.

And as lower rates bring the economy back to life over the next few months, the stock market should charge to new highs.