Powell Confirms Rate Cuts: Why an Enormous Stock Rally Is Next

For years now, Americans have endured one of the most fast-and-furious rate-hiking cycles in modern history. But today – thanks to U.S. Federal Reserve Board Chair Jerome Powell – they can finally breathe a sigh of relief.

That’s because this morning, at a highly anticipated conference in Jackson Hole, Wyo., Powell confirmed that the Fed is, indeed, ready to cut interest rates. And we think that in doing so, he gave the stock market the “green light” to rally to all-time highs in a flash. 

In fact, that rally has already begun. As of this writing, the S&P 500 is up about 1% on the day in response to this morning’s commentary. 

So… what exactly did Powell say? Why does it give stocks the go-ahead to rocket? And what stocks should you even be buying right now to prepare for those market gains?

Let’s get into it. 

Why Powell Inspired the Market Today 

While Board Chair Jerome Powell covered a few important topics in his speech at Jackson Hole, we’d argue that the single-most pertinent takeaway is this: “The time has come for policy to adjust.”

Throughout 2022 and ‘23, the U.S. Federal Reserve raised interest rates in its fastest hiking cycle in nearly 50 years. And for the majority of 2024, it has kept rates high to ensure it defeats inflation. 

But inflation has been mostly erased, which Powell acknowledged in his remarks this morning. He also noted that the labor market is weakening and that interest rates are presently too high, strongly implying that the Fed is (finally) ready to lower rates for the first time since the COVID-19 pandemic began. 

Why does that matter?

Well, high interest rates have choked off economic activity, and lower rates will revive it. Just consider: the housing market has frozen due to current mortgage rates. Sky-high auto financing rates are keeping most people from buying cars. Not many folks are remodeling or splurging on huge appliances, all due to excessive financing rates. The economy has been stymied since this rate-hike cycle began. 

Now the Fed is ready to lower those rates. That means all financing rates will decrease. More people will be able to afford things like appliances, cars, and homes. In turn, that will reinvigorate the economy. 

And as lower rates bring the economy back to life over the next few months, the stock market should charge to new highs.