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US Stocks Rally as Dow Hits Record High; Powell’s Remarks Boost Rate Cut Bets

US equities closed higher on Friday, with the Dow Jones Industrial Average finishing at an all-time high. The rally was fueled by Federal Reserve Chair Jerome Powell’s comments at the Jackson Hole symposium, which investors interpreted as a signal that rate cuts may be on the horizon.

Powell noted that the Fed’s September decision will hinge on upcoming labor and inflation data, but his remarks were seen as leaving the door open for easing.

Following Powell’s speech, traders sharply raised their bets on a September cut, with market odds climbing to nearly 90% from around 75% before his remarks.

DOWJ30 Weekly Chart

At the close, the Dow surged 1.89% to 45,631.74, surpassing its previous record high set on December 4, 2024. The S&P 500 gained 1.52% to 6,466.91, while the Nasdaq Composite advanced 1.88% to 21,496.54. Ten of the S&P 500’s eleven sectors ended higher, led by consumer discretionary, which jumped 3.18%. Semiconductor stocks also outperformed, with the Philadelphia Semiconductor Index up 2.7%. Major growth names saw broad gains, with Tesla soaring 6.2%. The rate-sensitive Russell 2000 index spiked 4.1%, hitting its highest level this year.

Friday’s rebound snapped a five-day losing streak for the S&P 500, which had been pressured by a broad sell-off in big tech stocks earlier in the week. For the week, both the S&P 500 and Dow closed higher, while the Nasdaq slipped 0.6% as investors rotated out of mega-cap tech into lower-priced shares.

Since bottoming in April—after former President Trump announced new tariffs—the US stock market has staged a strong comeback, with major indexes pushing to fresh highs. Resilient corporate earnings, optimism over trade negotiations, and growing expectations of Fed rate cuts have been the main drivers, though concerns over potential risks persist.

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