Dow rises 462 points as stocks rally after Powell says rate cuts ahead

• US stocks rose as Fed Chairman Jerome Powell signaled imminent interest rate cuts.

• Powell confirmed the dovish pivot in his speech at the Jackson Hole Economic Symposium.

• “The direction of travel is clear, and the timing and pace of rate cuts will depend on the data we receive,” Powell said.

US stocks rose on Friday, with the Dow Jones Industrial Average gaining more than 450 points after Federal Reserve Chairman Jerome Powell confirmed that interest rate cuts are close.

Powell hinted at the central bank’s impending dovish pivot in his speech at the Jackson Hole Economic Symposium on Friday, saying “the time has come for policy to adjust.”

Bond yields fell the day after the remarks. The 10-year Treasury yield fell six basis points to 3.801 percent, while the two-year note — which is highly sensitive to Fed policy — fell nine basis points to 3.915 percent.

“The direction of travel is clear and the timing and pace of rate cuts will depend on incoming data, the evolving outlook and the balance of risks,” Powell said.

The Fed has largely said the risks to its dual mandate of taming inflation and chasing full employment are balanced in recent months, but on Friday Powell changed his tune and said downside risks were rising .

“Overall, the economy continues to grow at a solid pace. But data on inflation and the labor market show an evolving situation. Upside risks to inflation have receded and downside risks to employment have increased,” he said. Powell said. “We do not seek or welcome further cooling of labor market conditions.”

This should pave the way for an interest rate cut at the Fed’s September FOMC meeting.

“The Powell pivot is here as the Fed has now become firmly accommodative,” Carson Group strategist Ryan Detrick said in an email to Business Insider on Friday, adding that the Fed is likely to adopt more rate cuts in the coming months.

With interest rate cuts looming, investors are now wondering how much the Fed will cut.

CME’s FedWatch tool suggests the Fed will launch its first rate cut at the September FOMC meeting and eventually cut rates by nearly 100 basis points by the end of the year.

Here’s where US indices stood at the closing bell at 4pm on Friday:

Here’s what else happened today:

The story continues

In commodities, bonds and crypto:

• West Texas Intermediate crude rose 2.62% to $74.92 a barrel. Brent crude, the international benchmark, rose 2.38% to $79.06 a barrel.

• Gold rose 1.16% to $2,545.80 an ounce.

• The 10-year Treasury yield fell six basis points to 3.801%.

• Bitcoin rose 5.43% to $63,663.

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