The Dow Jones Industrial Average experienced a significant rally, reaching an all-time high on Friday, following indications from Federal Reserve Chair Jerome Powell that the central bank may commence easing monetary policy in the upcoming month. The Dow increased by 846.24 points, representing a rise of 1.89%, achieving a new peak and concluding at a historic level of 45,631.74. The S&P 500 experienced an increase of 1.52%, concluding the session at 6,466.91. At its session peak, the broad market index approached its record by a mere three points.
The Nasdaq Composite experienced an increase of 1.88%, concluding at 21,496.53. Megacap technology stocks experienced a significant increase following Powell’s remarks. Nvidia experienced an increase of 1.7%, whereas Meta Platforms saw a rise exceeding 2%. Alphabet and Amazon each experienced an increase exceeding 3%. Tesla shares experienced an increase of approximately 6%.
During a measured address at the central bank’s annual gathering in Jackson Hole. Powell remarked that “the baseline outlook and the shifting balance of risks may warrant adjusting our policy stance.” The Fed chief noted that “the balance of risks appear to be shifting” between the central bank’s dual mandate of full employment and stable prices. He referenced “sweeping changes” in tax, trade, and immigration policies. Anticipations for a quarter-point rate reduction in September escalated to approximately 83%, up from around 75% earlier in the week, as indicated by the CME Group’s FedWatch tool. “The bar is extremely high now for the Fed to leave rates unchanged in less than a month,” stated Chris Zaccarelli, chief investment officer at Northlight Asset Management.
Friday’s performance stood in stark contrast to the considerably more pessimistic market activity observed earlier in the week. The major averages commenced the session on a downward trajectory week to date, influenced by pressures within the megacap technology sector. The recent rally enabled investors to recover a significant portion of the losses incurred earlier in the week. During the week, the 30-stock Dow increased by 1.5%, the S&P 500 saw a rise of 0.3%, whereas the Nasdaq experienced a decline of 0.6%.