NEW YORK, Aug. 22 (Xinhua) -- U.S. stocks closed sharply higher on Friday after Federal Reserve Chair Jerome Powell signaled the possibility of an upcoming interest rate cut, sending Wall Street to fresh highs.
The Dow Jones Industrial Average surged 846.24 points, or 1.89 percent, to a record 45,631.74. The S&P 500 climbed 96.74 points, or 1.52 percent, to 6,466.91, while the Nasdaq Composite jumped 396.22 points, or 1.88 percent, to 21,496.54.
Ten of the 11 major S&P 500 sectors finished in positive territory. Consumer discretionary stocks led the rally, advancing 3.18 percent, followed by energy, which rose 1.99 percent. Consumer staples was the lone decliner, slipping 0.35 percent.
Speaking at the Fed's annual Jackson Hole symposium, Powell said that "the baseline outlook and the shifting balance of risks may warrant adjusting our policy stance," noting that the balance between the Fed's dual mandate of full employment and stable prices "appears to be shifting." He also pointed to "sweeping changes" in tax, trade and immigration policy as factors reshaping the economic landscape.
"This was dovish than we in rates strategy thought he'd be. He did not object to a rate cut at all. Obviously, he is keeping his options open, but the key move was the downsizing of the tariff-induced inflation risk, mostly on account of a weakening labour market," wrote Padhraic Garvey, regional head of research at ING, and Chris Turner, global head of markets and regional head of research at ING.
Following their remarks, expectations for a September quarter-point rate cut jumped to roughly 83 percent, up from about 75 percent earlier in the week, according to CME Group's FedWatch tool.
Technology stocks were among the biggest beneficiaries of Powell's dovish tone. Nvidia rose 1.72 percent, Meta increased 2.12 percent, and Alphabet and Amazon each advanced more than 3 percent. Tesla shares surged 6.22 percent, adding momentum to the day's gains.
"The bar is extremely high now for the Fed to leave rates unchanged in less than a month," said Chris Zaccarelli, chief investment officer at Northlight Asset Management. "It's no surprise that markets reacted with glee and both stock and bond investors will be happy if prices close this afternoon at the levels they are now trading." ■