US stocks rally as Powell tees up rate cuts

U.S. stocks rallied Friday, as Treasury yields moved sharply lower after Federal Reserve Chair Jerome Powell signaled rate cuts were on the way as recent data had suggested that inflation was slowing toward the 2% target. 

At 17:54 ET (17:54 GMT), the Dow Jones Industrial Average rose 213 points, or 0.5%, S&P 500 climbed 0.5%, while NASDAQ Composite gained 0.7%. Powell says "time has come to adjust policy" 

Fed Chair Powell said on Friday that the "time has come" for policy to be adjusted Jackson Hole Symposium amid cooling inflation and a softer labor market. The Fed chief also appeared to keep the door open to a bigger rate cut, saying the size of rate cuts as well as the frequency would depend on incoming data. 

“The direction of travel is clear, and the timing and pace of rate cuts will depend on incoming data, the evolving outlook, and the balance of risks," Powell said on Friday during the Kansas City Fed’s annual conference at Jackson Hole, Wym.

The odds of a larger 50 basis cut at the September rose to 36% from 28% the previous day, according to Investing.com's Fed Rate Monitor Tool.

Treasury yields fell sharply, with the yield on the 2-Year which is sensitive to fed policy, falling 8 basis points to 3.93%.  Uber announces partnership with Cruise; Ross Stores, Workday jump on guidance 

Uber Technologies (NYSE:UBER ) has announced a multiyear partnership with Cruise, a subsidiary of General Motors (NYSE:GM ), allowing the latter's self-driving vehicles to be launched on Uber's ride-hailing platform. Uber was up less than 1%, while General Motors rose about 4%.

"We are encouraged that Uber is partnering with yet another AV player in Cruise and believe it reinforces the notion that AVs are unlikely to result in a 'winner-take-all' market, rather they are more likely to be commoditized," Deutsche Bank said in a note on Friday.  

Ross Stores (NASDAQ:ROST ) stock gained more than 1% after the retailer raised its fiscal 2024 profit forecast and posted second-quarter results above expectations late Thursday, benefiting from demand for its discounted apparel and easing freight costs.

Workday (NASDAQ:WDAY ) shares jumped 11% after the human resource software provider pivoted to a more balanced view on growth versus margins following better-than-expected Q2 revenue. The company also announced a $1 billion stock buyback plan.

"Workday surprised most investors (and us) by making a pronounced and very welcome pivot on the growth-margin trade-off, backing off the previous FY27/3-year CAGR of 17-19% and setting it at 15%," UBS said in a Friday note. The company also raised the fiscal 2027 non-GAAP operating margin target to 30% from 25% and announced a $1B stock buyback plan.

(Peter Nurse, Ambar Warrick contributed to this article.)

Source: Investing.com