Federal Reserve Chair Jerome Powell hinted at a possible rate cut in September, causing stocks to rise and Treasury yields and the dollar to fall. The S&P 500 and Nasdaq Composite surged 1.5% and 1.7%, with the Dow Jones hitting a record high. Powell’s comments at Jackson Hole suggest a rate cut may be on the horizon.

The two-year Treasury yield dropped nearly 10 basis points to 3.69%, while the 10-year yields fell 6 bps to 4.27%. Powell’s dovish remarks have sparked optimism in both stocks and bonds. Analysts note that rate cuts alone may not sustain stock strength unless the economy picks up momentum.

Powell’s comments at Jackson Hole have put pressure on the Fed to consider a rate cut in September. European markets followed suit, albeit in a more subdued manner. The STOXX 600 index climbed 0.4%, while Germany’s 10-year yield decreased 3 bps to 2.72%. The dollar index fell 0.89% post-Powell’s speech.

In Asia, Chinese shares gained after DeepSeek upgraded its V3 AI model and reports emerged of Nvidia halting work on the H20 AI chip. Tech stocks in Hong Kong rose 2.7%. Japanese data showed core consumer prices slowing but remaining above the central bank’s 2% target. Oil prices inched up, with Brent crude futures at $67.85 and U.S. crude at $63.78. Gold also saw gains, reaching $1,370 per ounce.

Read more at Yahoo Finance: Stocks rally, yields dip as Powell opens door to September rate cut