NEW YORK, Aug 23 (Reuters) – U.S. stocks rallied on Friday as dovish remarks from U.S. Federal Reserve Chair Jerome Powell solidified expectations that the central bank will cut its key policy rate in September.
“We do not see or welcome further weakening in labor market conditions,” Powell added in a speech that appeared to all but guarantee a rate cut at next month’s policy meeting, which would be the first such cut in over four years.
“The long wait is over,” said Ryan Detrick, chief market strategist at Carson Group in Omaha, Nebraska. “This was the dovish shift that market participants have been waiting for.”
“The Fed is clearly turning to the dovish camp and Powell has made it crystal clear that September will be the start of multiple rate cuts coming the remainder of this year,” Detrick added.
“Financials are at an all-time high, with a huge surge from regional banks,” Detrick said. “One would think if a major calamity or a recession were on the horizon, regional banks and financials wouldn’t be as strong as they’ve been.”
All three indexes logged weekly advances, standing on the shoulders of last week’s largest Friday-to-Friday percentage gains of the year.
Next week, the data-dependent Fed will have a raft of economic indicators to consider ahead of its September rate decision, including the Commerce Department’s revised second-quarter GDP and its broad-ranging Personal Consumption Expenditures (PCE) report, which includes the Fed’s preferred inflation yardstick, the PCE price index.
Advancing issues outnumbered declining ones on the NYSE by a 8.08-to-1 ratio; on the Nasdaq, a 3.68-to-1 ratio favored advancers.
The S&P 500 posted 81 new 52-week highs and no new lows; the Nasdaq Composite recorded 149 new highs and 51 new lows.
Volume on U.S. exchanges was 10.57 billion shares, compared with the 11.88 billion average for the full session over the last 20 trading days.
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Reporting by Stephen Culp in New York
Additional reporting by Medha Singh and Johann M Cherian in Bengaluru
Editing by Devika Syamnath and Matthew Lewis
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