Powell’s Rate Cut Bombshell Ignites Historic Rally: Dow Soars 700 Points as Fed Pivots

Jerome Powell just handed Wall Street exactly what it wanted—and the markets exploded.

The Fed Chair's clear signal that rate cuts are imminent triggered a historic buying frenzy, catapulting the Dow Jones Industrial Average a staggering 700 points higher in a single session.

Why This Matters

Powell’s pivot isn’t just a dovish hint—it’s a full-scale policy U-turn. Traders piled into risk assets, betting that cheaper money will fuel corporate profits and reignite economic momentum. The move reverses months of hawkish rhetoric that had kept markets on edge.

Market Mechanics

Lower rates mean lower borrowing costs. That fuels expansion, buybacks, and investor optimism. It also makes stocks more attractive versus bonds—a classic risk-on rotation. The speed of the rally suggests pent-up demand finally found its catalyst.

But Here’s the Catch

Sure, everyone loves a bull run—until they remember why the Fed is cutting in the first place. Economic softening isn’t exactly a cause for celebration, no matter how green your portfolio looks today. Typical Fed move: pump the markets first, ask questions later.

Bottom line: Powell’s put is back. For now.

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The blue-chip Dow Jones Industrial Average, which serves as a proxy for the U.S. economy, rocketed 732 points higher to hit an all-time high of 45,512.25. The benchmark S&P 500 index ROSE 1.3%, while the Nasdaq Composite index gained 1.5% in early trading.

U.S. markets are reacting positively to remarks Powell made at the Fed’s annual summer meeting in Jackson Hole. The central bank governor 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 shift its restrictive monetary policy stance.

Relief Rally

Analysts were quick to label the Aug. 22 rise in U.S. stocks a “relief rally,” coming as it does after the S&P 500 sold off for five consecutive days. Technology stocks sold off the most in recent days as markets worried about elevated valuations, persistent inflation, and the path forward for interest rates.

Markets also slumped as U.S. President Donald TRUMP intensified his attacks on the Federal Reserve, threatening to fire Chair Powell and calling for other central bank governors to resign. Markets are currently pricing in a 91% chance that the Federal Reserve lowers interest rates by 25 basis points at its upcoming Sept. 17 meeting.

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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