Markets lifted by Fed signals and tech earnings.
Investor sentiment pivoted sharply in August. After months of speculation, Fed Chair Jerome Powell’s Jackson Hole address confirmed that a September rate cut is on the table. Markets immediately priced in a more accommodative policy stance, with equities rallying across the board. Small-caps and cyclical sectors that had lagged earlier in the year suddenly outperformed as investors anticipated cheaper financing and stronger economic momentum.
At the same time, earnings season provided an added boost. Strong results from technology and AI-linked firms reassured investors that secular growth remains intact despite valuation concerns. Energy prices steadied, but investors hedged gains ahead of September’s key PCE inflation report.
Bonds rallied modestly as yields eased on rate-cut bets, while the U.S. dollar weakened, providing a lift to emerging-market assets.