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U.S. Stocks Rise as Investors Hope for Rate Cuts After Powell’s Speech

Prime Highlights:

  • U.S. stock futures rose slightly as investors await Fed Chair Powell’s Jackson Hole speech.
  • Expectations of potential interest rate cuts in September are boosting market optimism.

Key Facts:

  • Dow Jones futures climbed 131 points (0.3%), S&P 500 futures rose 0.2%, and Nasdaq 100 futures gained 0.1%.
  • The S&P 500 Equal Weight Index remained nearly unchanged for the week, showing stability across broader market segments.

Background

U.S. stock futures edged higher on Friday as investors prepared for Federal Reserve Chair Jerome Powell’s speech at the annual Jackson Hole economic symposium. Market participants are eager to gain insights into the Fed’s plans for interest rates and the broader direction of monetary policy.

Dow Jones futures went up by 131 points (0.3%), S&P 500 futures rose 0.2%, and Nasdaq 100 futures gained 0.1%. Investors are watching closely for hints that could affect the market in the coming weeks.

According to the CME FedWatch tool, markets were pricing in a 75% chance of a quarter-point rate cut at the September Federal Reserve meeting. The prospect of lower interest rates has recently supported areas of the market that have lagged behind this year’s rally. Investors have shifted focus from megacap technology stocks toward small-cap and value-focused sectors, hoping to benefit from a more favorable rate environment.

“I think the Fed and what Powell is going to try to articulate is an explanation and justification for starting a process of cutting interest rates beginning in September,” said Jim Caron from Morgan Stanley Investment Management. “That should be supportive for markets.”

Despite this optimism, major indices were under some pressure during the week. As of Thursday’s, close, the S&P 500 was down 1.2% week to date, the Nasdaq 100 fell 2.4%, and the Dow Jones slipped roughly 0.4%. Meanwhile, the S&P 500 Equal Weight Index was stable, increasing by less than one point over the course of the week, indicating neutral activity in the most varied areas of the market.

A cue that monetary policy will be eased might help markets after a summer lassitude and help lead into a stronger September.

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