Powell's Hint at Fed Policy Easing Sends Equities Higher Intraday; Yields Decline

02:12 PM EDT, 08/22/2025 (MT Newswires) -- US benchmark equity indexes surged intraday, while Treasury yields slumped, after Federal Reserve Chair Jerome Powell indicated a potential monetary policy pivot to lower rates.

The Dow Jones Industrial Average and the Nasdaq Composite were up 2.1% each at 45,715.6 and 21,533.5, respectively, after midday Friday. The S&P 500 rose 1.7% to 6,475.1. Barring consumer staples, all sectors were higher, led by consumer discretionary's 3% gain.

Powell on Friday said that downside risks to employment were rising, while the effects of tariffs on inflation will likely be short lived.

"In the near term, risks to inflation are tilted to the upside, and risks to employment to the downside -- a challenging situation," Powell said in prepared remarks for delivery at the Kansas City Fed's annual Economic Policy Symposium in Jackson Hole, Wyoming. "With policy in restrictive territory, the baseline outlook and the shifting balance of risks may warrant adjusting our policy stance."

The odds that the Federal Open Market Committee will cut rates by 25 basis points next month rose to 87% on Friday from 75% on Thursday, according to the CME FedWatch tool.

However, analysts at TD Economics and BMO cautioned that a move in September isn't guaranteed. The decision next month will largely hinge on August employment and inflation data, TD said.

US Treasury yields were lower intraday, with the two-year rate sinking 10.4 basis points to 3.69% and 10-year rate decreasing 7.2 basis points to 4.26%.

The so-called magnificent-7 group of stocks rallied, with Tesla (TSLA) jumping 5.6% and Alphabet (GOOG, GOOGL) gaining 3.9%. Amazon.com (AMZN) was up 2.7%, with Apple (AAPL) , Nvidia (NVDA) , Microsoft (MSFT) and Meta Platforms (META) also seeing gains.

In company news, Zoom Communications (ZM) shares soared nearly 12%. The video communication platform late Thursday raised its full-year outlook and reported a surprise increase in its second-quarter earnings.

Intuit (INTU) shares were down 4.8% intraday Friday, the steepest decline on the S&P 500. The company late Thursday reported stronger-than-expected fiscal fourth-quarter results.

West Texas Intermediate crude oil was up 0.3% at $63.69 a barrel intraday Friday.

Canada will drop many retaliatory tariffs on US goods, though its levies on autos, steel and aluminum will remain for now, Reuters reported, citing Canadian Prime Minister Mark Carney.

"We welcome this move by Canada, which is long overdue," a White House official reportedly said.

Gold was up 1.1% at $3,419.70 per troy ounce, while silver jumped 2.5% to $39.04 per ounce.

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