Wall Street had its best day in months after Federal Reserve Chair Jerome Powell hinted at possible interest rate cuts, boosting the S&P 500 by 1.5% and the Dow Jones by 1.9%. Investors hope for lower rates to stimulate the economy, despite risks of increased inflation. Treasury yields dropped, indicating expectations of a rate cut in September.

Powell’s speech in Jackson Hole, Wyoming reassured investors that the Fed is considering interest rate cuts, particularly after a weak job growth report. While Powell sees risks rising for the job market, he remains cautious, noting the delicate balance between employment and inflation. Wall Street anticipates possible rate cuts at the Fed’s next meeting in September.

Stocks of smaller companies surged following the news, with the Russell 2000 index posting its best day since April. Homebuilders and travel companies also saw gains on hopes of increased spending and home purchases with lower rates. Shares of Nio, a Chinese electric-vehicle maker, rose after launching sales of its SUV model.

In the tech sector, Intel climbed after agreeing to give the U.S. government a 10% stake in its business. Nvidia also saw a slight increase after recent struggles, as CEO Jensen Huang discussed potential new computer chips designed for China. Overall, major indices like the S&P 500, Dow Jones, and Nasdaq rallied significantly.

International markets responded positively as well, with Germany’s DAX rebounding after a slight economic shrinkage. Asian markets also saw gains, with stocks rising in Shanghai and South Korea. The global market outlook remains optimistic following Powell’s speech and expectations of future rate cuts.

Read more at Yahoo Finance: Wall Street soars on hopes for lower interest rates as the Dow surges 846 points to a record