US stocks are trading higher, driven by Federal Reserve Chairman Jerome Powell's remarks at the Jackson Hole conference.
- The Dow Jones Industrial Average (DJIA) rose 669 points (+1.50%) to 45,455.38 .
- The S&P 500 index rose 79.58 points (+1.25%) to 6,449.75 points .
- The Nasdaq index rose 258 points (+1.22%) to reach 21,358.44 points .
- The Russell 2000 index rose 16.26 points (+0.72%) to reach 2,290.35 points .
On the currency front, the US dollar declined against most major currencies:
- EUR/USD is at 1.1669 , up 0.55% .
- GBP/USD is at 1.3481 , up 0.52% .
- AUD/USD is trading at 0.6466 , up 0.73% .
- In contrast, the dollar/yen fell to 147.58 , down 0.53% .
Powell's statements and their impact
In his highly anticipated speech, Jerome Powell indicated that monetary policy remains in a restrictive zone and that "the balance of risks is shifting," which may justify adjusting monetary policy in the coming period . Although he did not directly announce an imminent interest rate cut, markets interpreted his speech as a potential signal of a gradual rate cut amid slowing economic indicators and rising risks related to tariffs and trade tensions.
Powell emphasized that the Fed will remain independent in its decisions, free from political pressure, in reference to public criticism from the White House calling for a sharp interest rate cut.
Impact on markets
- Stock markets received Powell's signals positively, as they reinforced expectations that a monetary easing cycle may be imminent, leading major indices to post strong gains.
- The US dollar fell against major currencies as investors saw a possible easing of monetary policy.
- Bond yields are likely to fall further if expectations of rate cuts continue.
Powell's remarks were cautious, but they gave markets optimism about the Fed's flexibility to cut interest rates if circumstances warrant . This stance led to a rally in stocks and a decline in the dollar, while investors cautiously await the Fed's next meeting in mid-September to confirm the direction.
