Fed Chair Powell's Boost for September Rate-Cut Triggers Rally in US Equity Indexes

04:41 PM EDT, 08/22/2025 (MT Newswires) -- US equity indexes soared on Friday after a dovish policy pivot signal from Federal Reserve Chair Jerome Powell sparked a rally in risk assets.

The Dow Jones Industrial Average traded 1.9% higher at 45,631.74, after touching a record 45,732.11 intraday. The Nasdaq Composite jumped 1.9% to 21,496.54, and the S&P 500 climbed 1.5% to 6,466.9. All sectors except consumer staples rose intraday. Consumer discretionary was the standout gainer, followed by energy and communication services.

"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 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."

Earlier in August, the Bureau of Labor Statistics reported non-farm payrolls rose by 73,000 in July, versus consensus for a 104,000 increase. June was revised down by 133,000 jobs and by 125,000 for May. Labor supply and labor force participation growth have softened, the Fed chief noted.

Powell saw the last payrolls data raising downside risks for the labor market and reducing upside risks for inflation, Morgan Stanley said in a note.

The odds of a 25-basis-point cut in interest rates in September jumped to 83% by Friday afternoon, up from 75% a day ago, according to the CME FedWatch Tool. The shift in Powell's stance supported Jefferies' expectation for three rate cuts this year, beginning next month, Chief US Economist Thomas Simons said in a note.

US Treasury yields fell, with the 10-year yield down 7.8 basis points to 4.25% and the two-year rate 9.8 basis points lower at 3.69%.

The ICE US Dollar Index slumped 0.9% to 97.73.

Gold futures jumped 1% to $3,416.6 per ounce, while silver futures advanced 2.1% to $38.89.

In company news, shares of Enphase Energy (ENPH) advanced 10%, the top performer on the S&P 500, after the company reported that all its products subject to the European Union's Radio Equipment Directive Article 3.3 cybersecurity requirements have been certified to be compliant with the rules.

Intuit's (INTU) shares slumped 5%, the steepest decline on the S&P 500 and the Nasdaq. The company posted largely in-line fiscal Q4 results, but guidance for Q1 revenue missed expectations, said UBS Securities in a note.

Workday (WDAY) shares dropped 2.8%, among the steepest decliners on the S&P 500 and the Nasdaq, after the company said it signed a definitive agreement to acquire Paradox, a conversational AI firm focused on streamlining the job application and hiring process.

In geopolitical news, peace negotiations between Russia and Ukraine stalled as Moscow's demands that Kyiv relinquish control of the Donbas region and abandon aspirations to join the North American Transatlantic Organization have been rejected by Ukraine.

President Donald Trump said Friday he will give Russian President Vladimir Putin "a couple of weeks," further extending his deadline for potential consequences against Moscow after urging the Russian leader to meet with his Ukrainian counterpart in hopes of ending the war, CNN reported.

West Texas Intermediate crude oil futures rose 0.4% to $63.81 a barrel, reflecting an increase in geopolitical risk.

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