Federal Reserve Chairman Jerome Powell has dispelled any remaining uncertainty by signaling that the central bank is preparing to shift its monetary policy, effectively paving the way for imminent interest rate cuts.

His remarks triggered a rally in rate-sensitive assets and pushed the dollar towards the lowest close since July 2023.

“The time has come for policy to adjust. The direction of travel is clear,” Powell announced at the Jackson Hole Symposium on Friday in Wyoming.

Powell expressed increased confidence in inflation returning to the 2% target and highlighted a heightened focus on the labor market, noting that conditions are cooling.

The market found significant support in Powell’s indication the Federal Reserve has “ample room” to respond to any emerging risks.

Small-cap stocks emerged as clear winners following Powell’s speech on Friday, with the Russell 2000 index surging by 3% by midday trading in New York. Traders flocked to these companies, anticipating significant relief from the prospect of lower borrowing costs.

Regional banks, as tracked by the SPDR S&P Regional Banking (NYSE:KRE), were the brightest market spot, with the industry gauge rallying over 4.5%. All of its 141 constituents showed a positive performance.

In contrast, large-cap indices maintained their gains from the market open, showing only little reaction to Powell’s remarks.

In the forex market, the dollar extended its decline, falling by 0.7% and heading toward its fifth negative weekly close with the sharpest decline since mid-November 2023. The decline in Treasury yields weighed on the greenback.

Commodities rallied, with gold up over 1.1% setting fresh all-time highs, and silver soaring 2.5%. Crude oil also surged, up 2.4%, while copper gained 1.7%.

Bitcoin (CRYPTO: BTC) rose 2.25% to $61,863.

Friday’s Performance In Major U.S. Indices, ETFs

According to Benzinga Pro data:

• The SPDR S&P 500 ETF Trust (NYSE:SPY) was 0.5% higher to $559.11.
• The SPDR Dow Jones Industrial Average (NYSE:DIA) rose 0.6% to $409.93.
• The tech-heavy Invesco QQQ Trust Series (NASDAQ:QQQ) rose 0.5% to $477.32.
• The iShares Russell 2000 ETF (NYSE:IWM) rallied 3% to $220.06.
• The Real Estate Select Sector SPDR Fund (NYSE:XLRE) outperformed, by 1.6%. The Consumer Staples Select Sector SPDR Fund (NYSE:XLP) lagged, down by 0.2%.

Friday’s Stock Movers

• Restaurant chain Cava Group Inc. (NYSE:CAVA) rallied 23%, after upbeat financial results last quarter.
• Other stocks reacting to earnings were BILL Holdings, Inc. (NYSE:BILL) down over 5%; Buckle, Inc. (NYSE:BKE) up 6.9%; Ross Stores, Inc. (NASDAQ:ROST) up 1.3%; Ubiquiti Inc. (NYSE:UI) up 5.9 and Workday, Inc. (NASDAQ:WDAY), up over 11%.
• Roku Inc. (NASDAQ:ROKU) rallied over 12% after Guggenheim upgraded the stock from Neutral to Buy.
• Mortgage-sensitive Redfin Corp. (NASDAQ:RDFN) rallied over 20%.
• Within regional banks, Eagle Bancorp, Inc. (NYSE:EGBN), United Community Banks Inc. (NYSE:UCB) and Valley National Bancorp (NYSE:VLY) were the strongest performers, up 10.5%, 9.6% and 8.5%, respectively.

Read More:
• Powell Removes ‘Any Uncertainty’ Around September Rate Cuts In Jackson Hole Speech: Economists

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This image was created using artificial intelligence MidJourney