Wall Street recorded a new all-time high following the Fed chairman's suggestion regarding the interest rate.

Jerome Powell hinted that there will be a reduction in the benchmark next month, and markets responded with euphoria. Stocks in Europe ended at five-month records.

August 22, 2025 04:10 p.m. EST

Traders work on the floor at the New York Stock Exchange (NYSE) in New York City, U.S., August 21, 2025. REUTERS/Brendan McDermid. (taken from the web)

The major Wall Street indices advanced on Friday, with the Dow Jones reaching a closing high, after the Federal Reserve chairman, Jerome Powell, suggested the possibility of a rate cut in September during his speech at the Jackson Hole symposium. According to statements made following the speech, Powell indicated that the final decision will depend on the upcoming employment and inflation data available before the Fed meeting scheduled for September 16 and 17.

Among the reactions to the speech, Nigel Green, CEO of deVere Group, valued that Powell “kept the door open” to a cut: “A cut in September would give households and businesses the assurance that the central bank is not falling behind. Delaying it only increases the likelihood of a harder landing,” Green indicated.

After Powell's intervention, traders' expectations for a rate cut in September increased, placing the probability close to 90%, up from the 75% estimated before the speech.

According to preliminary data, the S&P 500 added 96.73 points, 1.52%, closing at 6,466.55 units. The Nasdaq Composite increased by 396.22 points, 1.88%, to 21,496.54 points. Meanwhile, the Dow Jones Industrial Average advanced by 841.14 points, also 1.88%, to 45,626.64 points.

In the weekly balance, the S&P 500 accumulated a gain of 0.3%, the Dow Jones increased by 1.5%, and the Nasdaq fell by 0.6%. Ten of the eleven subsectors that make up the S&P 500 ended in the green, with discretionary consumption being the most dynamic.

The Russell 2000, a rate-sensitive indicator, surged to its highest level of the year. The overall rebound allowed the S&P 500 to break a streak of five consecutive sessions in decline, previously attributed to a sell-off of major tech stocks.

European stocks hit five-month highs after Jerome Powell signaled a possible rate cut.

The Euronext headquarters in the financial and business district of La Defense in Courbevoie, near Paris, France. REUTERS/Charles Platiau/Archive

European stock markets closed on Friday at their highest level in over five months after Powell's speech about the possibility of reducing interest rates in September. The pan-European STOXX 600 index rose by 0.4%, remaining less than 1% from its all-time highs, and closed its third consecutive week in the green. Almost all regional stock markets also ended with gains.

Powell suggested a likely rate cut at the Fed meeting scheduled for September 16 and 17, although he emphasized the relevance of employment and inflation data that will be known before that date. Currently, traders estimate a 90% probability of a cut in September, an increase from the 75% recorded before Powell's speech.

“The fact that the Fed is now preparing to offer the market that 25 basis point rate cut (...) is creating a lot of euphoria,” said Ipek Ozkardeskaya, analyst at Swissquote Bank. She added that “when the Fed is cautious, it is positive for the global financial market.”

Within the European market, the mining sector led the advances with a 1.6% increase, boosted by rising copper prices, which reached a one-week high following Powell's statements. Consumer-oriented sectors, such as automotive and travel and leisure, recorded increases of 1.4% and 1.3%, respectively. In contrast, insurers experienced the largest drop, falling by 0.6%.

In a note addressed to its clients, UBS stated it maintains a “neutral” stance regarding eurozone equities, citing persistent macroeconomic uncertainty in the short term and lowered its earnings growth forecast for the region this year to -3% from a previous estimate of 0%.

Meanwhile, international efforts to advance the end of the war in Ukraine remained stalled. Financial markets are waiting for more clarity following the initial enthusiasm sparked by recent meetings between Russia, Ukraine, and the United States.

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How does the Fed's suggestion affect the cryptocurrency market? 💰🚀

When the Federal Reserve chairman, Jerome Powell, suggests they are going to lower interest rates, it's like giving a shot of optimism to the entire financial market... and that includes cryptocurrencies, of course! 🥳 Here’s why...

* 🤑 Greater appetite for risk... When interest rates go down, money becomes "cheaper". This means that big investors and ordinary people find it easier to take out loans. At the same time, traditional assets like bonds yield less. So what happens then??? 🤔 People start looking for where to put their money to get more profits, and high-risk assets, like stocks and, yes, cryptocurrencies!, become much more attractive. That's why the crypto market often reacts positively.🔥🔥🔥

* 📈 Increase in liquidity... A more "loose" monetary policy (with low rates) injects more money into the global economy. When there is more money circulating, part of it ends up flowing into the digital asset markets, which can increase the prices of cryptocurrencies like Bitcoin and Ethereum. It's pure supply and demand!🔥🔥🔥

* 🌍 Global impact... As you saw in the article, not only did Wall Street react with euphoria, European stock markets also rose! 📈 This shows that a decision by the Fed in the United States has a domino effect worldwide. The cryptocurrency market is global by nature, so this optimism is felt everywhere. An investor in Tokyo, Paris, or Caracas could see the news and decide it's a good time to buy Bitcoin, for example. This makes the impact global! 🌎🔥🔥

* 🤷‍♀️ What does it mean for us??? It means that if the Fed cuts interest rates in September as expected (the odds are almost 90% now... that's very high!), we could see a bullish momentum for the crypto market. Although prices have already risen a bit due to the news, the actual cut could generate even more movements.🔥🔥🔥

BUT... and this is super important, the crypto market is very volatile! 🎢 There are many other factors that affect it, such as regulations, security news (like hacks), and even tweets from influential people... So while Powell's suggestion is a very positive signal, we can never be 100% sure!🔥🔥🫂

I hope this approach gives you a clearer idea of how the world of traditional finance connects with the world of cryptocurrencies... It's fascinating! 🫂✨ 🔥

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