Federal Reserve Chair Jerome Powell’s speech at the Jackson Hole Economic Symposium significantly impacted the U.S. stock market. Powell declared that “the time has come” for the Fed to begin cutting interest rates, signaling a potential easing cycle. This announcement led to a surge in stock prices, with the S&P 500 rising 1.1%, the Dow Jones Industrial Average adding 1.1%, and the tech-heavy Nasdaq Composite gaining 1.5%.

The markets reacted positively to Powell’s statement, which indicated that the direction of travel is clear, and the timing and pace of rate cuts will depend on incoming data and the evolving economic outlook. This news was particularly welcomed by the real estate sector, which saw significant gains, with the SPDR Real Estate ETF (XLRE) rising by 1.9%.

The speech also addressed the recent softness in the labor market, with Powell stating that the Fed does not seek further cooling in labor market conditions. This declaration comes just over three weeks before the Fed’s September 17-18 meeting, where the first interest rate cut since 2020 is expected to be announced.

Overall, Powell’s speech provided a clear signal to the markets, leading to a strong comeback from Thursday’s losses and a positive week for all three major stock indices.