Powell's 'Monetary Policy Shift' Remarks Lead Nasdaq to Close Up 1.47%

S&P 500 up 1.15%, Dow Jones up 1.14%
Powell: "Time to Adjust Policy Has Come"

Jerome Powell, Chairman of the Federal Reserve (Fed), hinted at a shift in monetary policy stance (pivot), leading to gains across the three major stock indices in the New York stock market.

On the 23rd (local time), the Dow Jones Industrial Average at the New York Stock Exchange (NYSE) closed at 41,175.08, up 462.30 points (1.14%) from the previous session. The Standard & Poor's (S&P) 500 index rose 63.97 points (1.15%) to 5,634.61, and the Nasdaq Composite Index surged 258.44 points (1.47%) to close at 17,877.79.

Powell’s direct formalization of a pivot toward a rate cut in September ignited buying sentiment. In his keynote speech at the Jackson Hole Symposium held in Jackson Hole, Wyoming, Powell stated, "The time has come to adjust policy," and "Our path forward is clear." Although Powell did not explicitly mention a rate cut, the market is anticipating the Fed to begin cutting rates starting in September.

The market’s focus now is on the pace of rate cuts. Market sentiment suggests that stock prices need to be reassessed depending on how quickly the benchmark interest rate is lowered. Powell did not explicitly limit the September rate cut to 25 basis points, leaving room for a possible 50 basis point cut, according to some evaluations.

Following the pivot announcement, rate cut expectations have further declined. According to the Chicago Mercantile Exchange (CME) FedWatch Tool, the federal funds futures market reflects a 65.5% probability of a 25 basis point cut in September. The bet that the total rate cut will reach 200 basis points by June next year has expanded to 32.1%. This is currently the most likely scenario. Until the previous day, the 175 basis point cut probability was considered the most likely at 34.4%.

Technology stocks also soared on the day. Nvidia rose 4.55%, and Tesla jumped 4.59%. Stocks related to artificial intelligence (AI) and semiconductors also showed gains. Arm Holdings increased by 4.56%, while Qualcomm, AMD, and Intel rose by over 2%. With semiconductor stocks surging, the Philadelphia Semiconductor Index also jumped 2.79%.