Thu, Aug 21, 2025, 9:18 AM 3 min read
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Federal Reserve Chair Jerome Powell signaled a pivot to rate cuts at last year’s Jackson Hole, sending stocks higher
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Traders expect the S&P 500 to move about 0.8% in either direction through the end of the week, with Fed Chair Jerome Powell’s speech on Friday likely to be a driving force behind that move.
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Stocks jumped more than 1% the day of last year’s Jackson Hole speech, when Powell signaled the Fed was ready to cut interest rates for the first time in 4 years.
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Analysts earlier this week expressed concern that investors were overly optimistic about the likelihood of a September rate cut, but expectations and stocks have drifted lower in recent days.
Wall Street was on edge Thursday, with stocks trading lower as investors awaited what could be a pivotal policy speech from Federal Reserve Chair Jerome Powell.
Powell is scheduled to speak Friday morning at the Fed’s annual Jackson Hole Economic Policy Symposium. Investors will be scrutinizing Powell’s address for signs that the Fed is ready to resume cutting interest rates in September after nine months on hold.
Powell’s speech is the biggest event of the week for the stock market, and traders are positioning themselves accordingly. Options pricing suggests investors expect the S&P 500 to move about 0.8% in either direction through the end of this week. That’s nearly twice the S&P 500’s average daily move over the past month.
At last year’s Jackson Hole, Powell declared the Fed was ready to begin cutting interest rates more than a year after policymakers hiked rates for the 11th and final time in their post-pandemic policy tightening campaign.
“The time has come for policy to adjust,” Powell said. “With an appropriate dialing back of policy restraint, there is good reason to think that the economy will get back to 2 percent inflation while maintaining a strong labor market.”
It was the news Wall Street was hoping for. The S&P 500 jumped more than 1% to trade just shy of an all-time high. Though for investors last year, seeing was believing; it wasn’t until mid-September, when the Fed cut rates for the first time, that the index finally broke its previous record.
Evercore ISI analysts warned in a note on Sunday that Powell’s speech could deliver stocks a rough patch if Wall Street finds his comments inadequately dovish. “For a market that was eager to embrace ’50 in Sept’, a balanced view could catalyze a near term -7% to -15% pullback into October,” the analysts wrote, referring to recent speculation that the Fed could make a jumbo, 50 basis point (bps) cut next month.
