US Markets Jump After Powell Update – Dow up 1.9%
US stock markets leapt higher in trading on Friday after Jerome Powell’s speech at Jackson Hole locked in a rate cut from the Fed at its next meeting in September. The Dow surged 1.89% higher to close at 45,631, the S&P jumped 1.55% to 6,466, and the Nasdaq closed 1.88% higher at 21,496. The dollar was smashed after the speech, with the DXY closing down 0.90% at 97.73. Treasury yields also dropped hard as markets repriced in a September cut, with the 2-year down 9.5 basis points to 3.696% and the benchmark 10-year down 7.4 basis points to 4.254%. Oil prices were relatively steady, with Brent up just 0.09% to $67.73 and WTI up 0.22% to $63.66 a barrel. Gold drove higher on the weaker dollar, up 0.99% to $3,371.86 by the close.
Powell Comments in Focus to Start the Week
Jerome Powell’s much-anticipated speech from Jackson Hole on Friday led to a surge in US stocks, with the Dow jumping to a record closing high on the back of dovish comments from the Fed Chair. However, many market participants are adding words of caution, as they saw the update confirming only one rate cut in the coming months rather than the start of a harder easing cycle. The FOMC is still concerned about the potential for tariff-driven inflation in the US economy, and some investors fear this could outweigh concerns about the jobs market. The first test for that comes at the end of this week with the key Core PCE Price Index data release, which is expected to show the fastest annual pace in five months. This could well put a dent in rate-cut expectations, not just for September but for the rest of the year.
Steady Calendar Day to Kick Off the Week for Traders
Traders are expecting follow-through from the Fed’s Jackson Hole symposium and updates from various central bank heads to dominate flow in the first few sessions of the week. We have already seen some moves in the yen on the Asian open after Bank of Japan Governor Kazuo Ueda advised that he expects the Japanese job market to remain tight while speaking on a panel near the end of the event. New Zealand retail sales numbers were released early in the day, with both the headline and the core figures coming in much higher than expected, which has helped support the Kiwi. The European session will see reduced liquidity with UK markets enjoying a long weekend; however, euro traders are expecting some moves around the German IFO Business Climate data (exp. 88.7) release. There is little scheduled in the New York session today as well, although new home sales numbers (exp. 635k) will be closely watched, as will speeches from Fed members Logan and Williams.
