Dow Hits Record High as Powell's Dovish Tilt Fuels Stock Market Rally

05:01 PM EDT, 08/22/2025 (MT Newswires) -- Wall Street's equity indexes rallied on Friday, with the Dow Jones Industrial Average hitting a record high as Federal Reserve Chair Jerome Powell hinted at a potential shift in monetary policy toward lower interest rates.

The Dow finished 1.9% higher at 45,631.7, an all-time closing high. The Nasdaq Composite was up 1.9% at 21,496.5, rebounding after a three-day slide. The S&P 500 rose 1.5% to 6,466.9, snapping a five-day losing streak.

Barring consumer staples, all sectors were higher, led by consumer discretionary's 3.2% gain.

For the week, the Dow climbed 1.5% and the S&P 500 edged up 0.3%. The Nasdaq was 0.6% lower.

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."

Markets scaled back their expectations of a 25-basis-point rate cut next month as analysts cautioned that a move in September isn't guaranteed. The odds moved from above 90% earlier in the day to 83% by Friday late afternoon, though they were still higher than 75% on Thursday, according to the CME FedWatch tool.

"While a few (Federal Open Market Committee) voters have probably already made up their minds on a September rate cut, a majority are still likely awaiting the August employment and inflation reports before making their final decision," said Scott Anderson, chief US economist at BMO. "We continue to forecast a September cut from the Fed but think it's a closer call than the fed funds futures market is letting on."

US Treasury yields were lower, with the two-year rate sinking 9.6 basis points to 3.7% and 10-year rate decreasing 7.1 basis points to 4.26%.

The so-called magnificent-7 group of stocks advanced, with Tesla (TSLA) jumping 6.2% and Amazon.com (AMZN) rising 3.1%. Alphabet (GOOG, GOOGL), Apple (AAPL) , Nvidia (NVDA) , Microsoft (MSFT) and Meta Platforms (META) also logged gains.

In company news, Zoom Communications (ZM) shares soared nearly 13%. The video communication platform late Thursday raised its full-year outlook and reported a surprise increase in its second-quarter earnings.

Intuit (INTU) shares slumped 5%, 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 0.5% at $63.81 a barrel in Friday late-afternoon trade. Oil prices were on track for weekly gains following two consecutive weeks of losses.

"The recovery was driven by technical support levels holding near $65 for Brent and $62 for WTI, which spurred short covering," Saxo Bank Head of Commodity Strategy Ole Hansen said in a report published Friday. "Fundamentals also provided tailwinds: the US reported a larger-than-expected crude stock draw, driven by exports and refinery runs at their strongest pace since 2019."

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.

Gold was up 1.1% at $3,417 per troy ounce, while silver jumped 2.1% to $38.89 per ounce.

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