A decisive move toward dovishness by Federal Reserve Chair Jerome Powell all but cemented bets on an imminent interest-rate cut, driving stocks and bonds sharply higher at the end of a volatile week.
Powell’s speech sparked the strongest cross-asset rally since April, with major ETFs tracking equities, Treasuries, credit and cryptocurrencies all rising at an average pace of 1.3%.
Economically sensitive shares powered the rebound in S&P 500, which climbed 1.7%. A gauge of tech megacaps jumped 2.2% while the Russell 2000 soared 4%. Bank stocks headed for a record high.
“The stability of the unemployment rate and other labor market measures allows us to proceed carefully as we consider changes to our policy stance,” Powell said Friday. “Nonetheless, with policy in restrictive territory, the baseline outlook and the shifting balance of risks may warrant adjusting our policy stance.”
By shifting focus toward risks in the jobs market, the Fed chair signaled it may not wait for perfect inflation data before cutting rates.
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