[New York Stock Market Briefing] Powell hints at 'rate cut'... The three major indexes jump more than 1%

The three major New York indexes rallied unanimously as Jerome Powell, Chair of the Federal Reserve (Fed), made comments boosting expectations for a rate cut.

On the 22nd (local time) at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 45,631.74, up 846.24 points (1.89%) from the previous session.

The S&P 500 index finished at 6,466.91, up 96.74 points (1.52%), and the tech-heavy NASDAQ Composite ended at 21,496.54, up 396.22 points (1.88%), each compared to the previous close.

The Dow set an all-time high, breaking the record set in December last year, while the S&P 500 rebounded after six sessions and came close to its all-time high of 6,468.54, recorded on the 14th of this month.

Both the Dow and NASDAQ rose more than 2% in the morning session, but gave up some gains in the afternoon.

Chair Powell opened the possibility of policy adjustment in his keynote address at the 'Jackson Hole Symposium' in Jackson Hole, Wyoming, emphasizing downside risks to the labor market. He stated, "Considering the stability of the unemployment rate and other labor market indicators, we can carefully review changes in policy stance," adding, "However, as policy remains in restrictive territory, changes in the baseline outlook and risk balance could justify monetary policy adjustments."

He said, "Overall, the labor market appears balanced, but this is an unusual form of balance as both labor supply and demand have slowed significantly," and added, "Such an unusual situation suggests increasing downside employment risks. If these risks materialize, this could quickly result in severe layoffs and a rise in the unemployment rate."

The market interpreted Powell’s comments as a 'possibility of a rate cut.' According to FedWatch by the Chicago Mercantile Exchange (CME), the interest rate futures market reflected approximately an 83% probability of the Fed cutting rates by 0.25% at the September FOMC meeting, up from 75% the previous day.

The New York Times (NYT) reported, "This is the strongest signal yet of a restart of rate cuts," and noted, "Although not explicitly supportive, Powell's emphasis on potential economic deterioration has made it clear a rate cut next month is likely."

By stock, major tech companies rose significantly. NVIDIA, which has the highest market capitalization, rose 1.72%; Alphabet rose 3.04%; and Amazon gained 3.10%. Meta advanced 2.12%, Apple gained 1.27%, and Tesla soared 6.22%. Leading AI stock Palantir also rose 1.64%.

Seulkee Lee, Hankyung.com Journalist seulkee@hankyung.com