US stocks rallied close to their records Friday after the head of the Federal Reserve finally said out loud what Wall Street has been expecting for a while: Cuts to interest rates are coming soon to help the economy.
- The S&P 500 rose 63.97 points, or 1.1%, to 5,634.61. That's up 80.36 points, or 1.4%, for the week.
- The Dow rose 462.30 points, or 1.1%, to 41,175.08. That's up 515.32 points, or 1.3%, for the week.
- The Nasdaq rose 258.44 points, or 1.5%, to 17,877.79. That's up 246.07 points, or 1.4%, for the week.
Fed Chair Jerome Powell said in a highly anticipated speech that the time has come to lower its main interest rate from a two-decade high. The index pulled within 0.6% of its all-time high set last month and has clawed back virtually all of its losses from a brief but scary summertime swoon, per the AP. Powell's speech marked a sharp turnaround for the Fed after it began hiking rates two years ago as inflation spiraled to its worst levels in generations. The Fed's goal was to make it so expensive for US households and companies to borrow that it slowed the economy and stifled inflation.
For Friday, at least, Powell's speech helped lead to a widespread rally across Wall Street. The smaller stocks in the Russell 2000 jumped 3.2% to lead the market. Smaller companies can feel greater benefit from lower interest rates because of their need to borrow to grow. In the S&P 500 index of big companies, more than 85% of the stocks climbed. The strongest push upward came from Nvidia, which rose 4.5%. Ross Stores added 1.8% after topping analysts' estimates for profit and revenue during the latest quarter. That helped offset an 8.2% tumble for Red Robin Gourmet Burgers, which reported a worse loss for the latest quarter than expected. It cited a slowdown across the restaurant industry.
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