Markets worldwide start going on a tear after Jerome Powell signals he’s open to a September rate cut

Bonds & currencies shift, Europe & Asia rise

Nick Lichtenberg is Fortune Intelligence editor and was formerly Fortune's executive editor of global news.

Wall Street responded sharply to Federal Reserve Chair Jerome Powell’s address at the Jackson Hole symposium on Friday. The speech, delivered amid mounting economic uncertainty and political pressure, provided new signals on the Fed’s interest rate outlook that immediately moved stocks, bonds, and global currencies.

Major U.S. stock indices surged following Powell’s remarks, with the S&P 500 climbing over 1.5% and set to break a five-day losing streak—the longest since January. The Dow Jones Industrial Average and the Nasdaq Composite each rose

Ten out of 11 S&P 500 sectors traded higher, led

In the bond market, Treasury yields fell and the U.S. dollar weakened as traders increased their bets on a September rate cut. The CME FedWatch tool showed a roughly 70% probability of a 0.25 percentage point reduction next month, slightly below earlier expectations. European and Asian equity markets likewise gained, with China’s CSI 300 index reaching multi-year highs, reflecting global optimism for lower U.S. rates.

Powell’s speech carefully balanced concerns: He acknowledged unusual weakness in both hiring and inflationary trends, and signaled confidence that the impacts from tariffs might be temporary. Investors and analysts viewed this as an indirect endorsement of policy easing, though Powell stopped short of explicitly pledging a cut.

Traders are now positioning for the Fed’s September meeting, with markets pricing in up to two rate cuts

Overall, Powell’s Jackson Hole speech quickly reversed the recent stock market slide and triggered renewed optimism that the Fed may act to support growth—while underscoring the uncertainty clouding monetary policy for the remainder of 2025.

For this story, Fortune used generative AI to help with an initial draft. An editor verified the accuracy of the information before publishing.