The major averages soared following the Fed Chairman’s speech signaling a possible interest rate cut next month. The Dow Jones Industrial Average jumped 846 points or 1.89% to a fresh new high. The S&P 500 rose 96 points or 1.52% to a new high while the Nasdaq rose 396 points or 1.88% to a new high. Today’s rally wiped out the weakness shown in the markets this week.

In Jackson Hole, Wyoming today, Fed Chairman Powell said that “the baseline outlook and the shifting balance of risks may warrant adjusting our policy stance.” Powell added that “the balance of risks appear to be shifting” between the Fed’s dual mandate of full employment and stable prices. Following this speech, the major averages surged. The markets now have a 90% probability up from 75% earlier in the week of a 0.25 percentage-point rate cut in September. The 10-year Treasury yield is down 7 basis points to 4.26%. The 2-year yield dropped more than 8 basis points to 3.70%.

Besides bonds rally, housing stocks like DR Horton and Lennar rose 5% on a possible rate cut. The financials were higher as well.

Big cap tech had a good day with Google and Amazon up 3% each. Chips were also higher. Intel rose 7% on news the US government is getting closer to acquiring a 10% stake in Intel.

Not many stocks to the downside today. Software firms, Workday and Intuit were lower on earnings. Telecom stocks was lower while consumer defensive stocks were lower as well with more money going into risk on assets.

On the commodity front, oil was quiet. Gold was up a percent while bitcoin rose 4% along with the other cryptocurrencies.

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