U.S. stocks soared on Aug. 22 after Federal Reserve Chair Jerome Powell indicated that interest rate cuts are on the way in the second half of this year.
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The blue-chip Dow Jones Industrial Average, which serves as a proxy for the U.S. economy, closed up 846.24 points to finish the trading week at an all-time high of 45,631.74. The benchmark S&P 500 index closed up 1.52%, while the Nasdaq Composite index gained 1.88% on the day.
U.S. markets reacted positively to remarks Powell made at the Fed’s annual summer meeting in Jackson Hole, Wyoming. The central bank chair said that current economic conditions “may warrant” interest rate cuts in coming months and that it might now be time for the Federal Reserve to move away from its restrictive monetary policy stance.
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The surge in U.S. equities on Aug. 22 comes after the S&P 500 index sold off for five consecutive days. Technology stocks sold off the most over the past week as investors worried about elevated valuations, persistent inflation, and the path forward for interest rates. Markets are pricing in a 91% chance that the Federal Reserve lowers interest rates by 25 basis points at its Sept. 17 meeting.
Markets also got a lift on Aug. 22 from news that Canada has dropped most of its retaliatory tariffs on U.S. imports as America’s northern neighbor seeks a trade truce with the Trump administration. There are also reports that chipmaker Intel (INTC) has agreed to give the U.S. government a 10% equity stake in exchange for funding it received under the CHIPS and Science Act.
Is the SPDR S&P 500 ETF Trust a Buy?
The SPDR S&P 500 exchange-traded fund (SPY) currently has a consensus Moderate Buy rating among 504 Wall Street analysts. That rating is based on 418 Buy, 80 Hold, and six Sell recommendations issued in the last three months. The average SPY price target of $719.03 implies 11.43% upside from current levels.
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