S&P 500 Jumps as Powell Signals September Rate Cut and Treasury Yields Drop
The S&P 500 surged on Friday, supported by a sharp fall in Treasury yields after Federal Reserve Chair Jerome Powell signaled the central bank may cut interest rates as early as September. His comments, delivered at the Jackson Hole Symposium in Wyoming, eased investor uncertainty over monetary policy.
By 1:13 p.m. ET (17:13 GMT), the Dow Jones Industrial Average gained 914 points (2%), the S&P 500 rose 1.6%, and the NASDAQ Composite advanced 1.8%.
Powell warned that “downside risks to employment are rising” and suggested that tariffs introduced by the Trump administration may have only temporary inflationary effects. He added that with policy already in restrictive territory, the balance of risks may soon justify a rate cut. Analysts at Vital Knowledge said Powell’s comments were the clearest sign yet of a September cut, although he remained cautious about inflationary pressures.
The yield on the 2-year Treasury note fell sharply as markets priced in nearly full odds of two rate cuts by year-end.
Canada to Ease Tariffs on U.S. Goods
In a separate development, Canada announced it will remove most of its retaliatory 25% tariffs on American imports ahead of the upcoming USMCA review. Tariffs on U.S. autos, steel, and aluminum, however, will remain in place. The decision comes after trade tensions with the U.S. escalated when President Trump first imposed steel and aluminum duties.
UBS Raises S&P 500 Targets
Following a strong second-quarter earnings season, UBS lifted its S&P 500 targets, citing better-than-expected corporate results. The investment bank increased its year-end target to 6,600 and its June 2026 target to 6,800, up from Thursday’s close of 6,370.
Earnings grew 8% in Q2, well above the 5% forecast. The “Magnificent 7” tech stocks delivered standout results, with 30% growth compared to UBS’s 20% estimate. Median companies beat earnings expectations by 4.5 percentage points, stronger than the typical 3.5-point beat. Positive third-quarter guidance reinforced expectations of continued profit growth despite tariff headwinds.
Tech & Stock Market Movers
- Meta Platforms (NASDAQ:META) signed a $10 billion deal with Google (NASDAQ:GOOGL) to use Google Cloud services for six years, fueling AI development.
- NVIDIA (NASDAQ:NVDA) shares fell after reports it asked suppliers to halt production of its China-specific H20 AI chip amid Beijing scrutiny.
- Workday (NASDAQ:WDAY) slipped as it kept its subscription revenue guidance mostly unchanged, aside from a small Paradox acquisition boost.
- BJ’s Wholesale Club (NYSE:BJ) gained after raising its full-year earnings outlook, celebrating 8 million members.
- Intuit (NASDAQ:INTU) fell after forecasting weaker Q1 revenue growth, citing Mailchimp struggles.
- Zoom Video Communications (NASDAQ:ZM) jumped after reporting strong Q2 results and lifting its full-year revenue forecast, highlighting enterprise growth.
With Powell’s dovish shift, easing trade tensions, and upbeat earnings, Wall Street ended the week on a strong note, pushing the S&P 500 closer to record highs.
