• Jerome Powell signals potential interest rate cut at the September Fed meeting.
• Wall Street indexes surged over 1% following Powell's comments.
• Probability of a September rate cut now around 90% according to traders.
• Powell acknowledges risks in the labor market amid inflation concerns.

U.S. Federal Reserve Chair Jerome Powell's recent speech at the Jackson Hole Symposium has prompted a significant rally in financial markets, with major indices jumping more than 1%. Powell indicated that the Fed is leaning towards a potential interest rate cut at its upcoming September meeting, saying, "The baseline outlook and the shifting balance of risks may warrant adjusting our policy stance," highlighting the importance of forthcoming jobs and inflation data. The Dow Jones Industrial Average soared over 700 points, while both the S&P 500 and Nasdaq also posted strong gains, according to Business Insider, Reuters, and Channel News Asia.

Following Powell's speech, traders increased their bets on an interest rate cut, now assigning a nearly 90% probability to a 25 basis-point cut for September, up from approximately 75% beforehand. Art Hogan, Chief Market Strategist at B Riley Wealth, noted that Powell's remarks shifted the balance of risk discussions, emphasizing labor market weakness as a significant driver for potential policy adjustments. The Dow rose 667.07 points to an all-time high of 45,452.57 shortly after Powell's address, according to Reuters and Channel News Asia.

In the speech, Powell acknowledged the "balance of risks" surrounding employment and inflation, stating that while labor market conditions appear balanced, they are "curious" due to a notable slowdown in the supply and demand for workers. He stressed the need for monitoring upcoming labor statistics to guide future Fed decisions, which highlights both a cautious and responsive approach to the changing economic landscape, as reported by Business Insider and Reuters.

The immediate market reaction saw all 11 S&P 500 sectors trading higher, with rate-sensitive stocks, such as real estate and consumer discretionary, posting notable gains. Additionally, UBS Global Wealth Management raised its year-end target for the S&P 500, citing expectations of corporate earnings strength and easing trade tensions amid shifting interest rate policies. These dynamics have contributed to a recent rebound in U.S. stocks from earlier lows this year, according to Reuters and Channel News Asia.