Wall Street surged on Friday after Federal Reserve Chair Jerome Powell signalled that interest rate cuts could be on the horizon, a prospect long demanded by investors and President Donald Trump.The S&P 500 climbed 1.6%, snapping a six-day losing streak and moving within range of its all-time high set last week. The Dow Jones Industrial Average soared 890 points, or 2%, and was also poised to eclipse its December record, while the Nasdaq composite advanced 1.9% by late morning, AP reported.“Ka-Powell,” said Brian Jacobsen, chief economist at Annex Wealth Management, describing the market reaction to Powell’s speech at Jackson Hole. “The Fed isn’t going to be the party-pooper.”Powell acknowledged rising risks for the job market, which, along with inflation, form the Fed’s dual mandate. He said the current balance in the labour market allows policymakers to “proceed carefully” on rate changes. Inflation pressures, he added, remain a concern given Trump’s tariffs.Traders interpreted Powell’s remarks as a strong signal for a September cut. According to CME Group data, the probability of the Fed lowering its benchmark rate next month jumped to 91% from 75% a day earlier. Treasury yields dropped sharply, with the 10-year yield falling to 4.26% from 4.33% and the 2-year sliding to 3.69% from 3.79%.Small-cap stocks led the rally, with the Russell 2000 index surging 3.8%. Rate-sensitive sectors also gained, as homebuilders Lennar, PulteGroup and D.R. Horton advanced nearly 5% each. Travel companies soared on hopes of stronger household spending, with Norwegian Cruise Line up 6.4%, Delta Air Lines 6.2%, and Caesars Entertainment 6%.Among individual stocks, Nio jumped 13.3% after launching pre-sales of its premium ES8 SUV in the US market. Nvidia added 1.4% after CEO Jensen Huang said the company is working with the Trump administration on a China-specific GPU design that complies with US export restrictions.Overseas, Germany’s DAX edged up 0.4% after data showed a 0.3% contraction in its economy in the June quarter. Asian equities closed higher, with Shanghai up 1.4% and South Korea’s Kospi rising 0.9%.
