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Stocks Surge on Hopes of September Rate Cut
22 Aug
Summary
- Investors confident in September rate cut after Powell's dovish speech
- Nvidia earnings and Fed's inflation data to be closely watched next week
- Broad market rally with Dow, S&P 500, and Russell 2000 hitting records
As of August 22nd, 2025, the stock market is poised to end the historically weak trading month of August on a high note. Investors have gained confidence that a September interest rate cut may be on the table, following a dovish speech by Federal Reserve Chair Jerome Powell at the Jackson Hole symposium.
Powell's remarks have "removed an important restraint that was tied to investor optimism," according to CFRA Research's chief investment strategist Sam Stovall. The central bank now appears inclined to lower rates at its next meeting in mid-September, which has fueled a broad-based market rally.
On Friday, the Dow Jones Industrial Average hit a fresh record, surging over 900 points or 2% at its high. Small-cap stocks, as measured by the Russell 2000 index, jumped more than 3%. The S&P 500 Equal Weight index also reached an all-time high, surpassing its prior record from November 2024.
Investors will be closely watching Nvidia's earnings results next week, as the artificial intelligence chipmaker's performance could confirm whether the recent tech sector resurgence is sustainable. Additionally, the July personal consumption expenditure price index, the Federal Reserve's preferred inflation gauge, will provide insight into the central bank's policy decisions.
Despite the positive momentum, investors still need to navigate a slew of economic data releases in September before the Fed's policy meeting. However, the market's elation on Friday could carry through next week before the Labor Day holiday, potentially boosting stocks across various sectors.
