New York, Aug. 23, 2024 – Stocks rose Friday as Wall Street cheered a signal from Federal Reserve Chair Jerome Powell that long-awaited interest rate cuts are finally coming.
The Dow rose 253 points, or 0.6%, after jumping more than 400 points earlier in the day. The S&P 500 gained 0.6% and the Nasdaq Composite added 0.8%.
All three major indexes are on pace to end the week higher.
Powell said that “the time has come” to ease rates, currently perched at a 23-year high, at a key economic summit in Jackson Hole, Wyoming.
He also noted that the labor market has cooled enough not to pressure inflation higher and that the central bank does not want to see more weakening in job market conditions.
“While a September rate cut is essentially a done deal at this point, the more important question is whether this will be a one and done rate cut, or if it will be the beginning of a more substantial cutting cycle, and that will be determined by the economic data over the next two to three months,” wrote Glen Smith, chief investment officer of GDS Wealth Management, in a Friday note.
Minutes from the Fed’s July meeting, released on Wednesday, show that the “vast majority” of the Federal Open Market Committee would want to lower rates in September if inflation continues to slow down.
Some officials noted the importance of communicating that the Fed is data dependent and has no preset path.
Some officials also fretted that the softening labor market could weaken considerably if policy stays restrictive for too long.
Recent data has shown that US job growth was weaker than previously estimated in the 12 months leading up to March.
The Bureau of Labor Statistics’ preliminary 2024 review of employment data indicated there were 818,000 fewer jobs during that period. (CNN)
