Fed's Powell hints at early rate cut. Dow surges 870 points, Nasdaq 420; Cboe drops 12%

US stocks which surged higher on Friday ahead of Federal Reserve Chairman Jerome Powell's Jackson Hole speech extended their leads following the address after the Central Bank chief hinted at a likely rate cut soon in the wake of a shaky US job market.

All three major indices on Wall Street cheered the announcement, rising as high as 2% around 10:34 AM ET (8 pm India time). Nasdaq Composite was the top gainer, hitting the day's high of 21,523.23. Meanwhile, the Dow Jones Industrial Index surged 2% or 870 points to 45,654.63 while the S&P 500 Index climbed 1.6% to scale 6,469.61.

Fear gauge Cboe Volatility Index fell 12% to 14.68.

The high profile speech said that the job market faces "downside risks" and that the Federal Reserve may soon need to cut interest rates to support the economy. Powell suggested the labor market could benefit from lower rates, which the Fed has kept unchanged for eight straight months.

In his speech, he suggested that the Fed may need to cut rates at its next meeting, in September. He cited growing risks to the economy, including some “unusual” behavior in the job market that could become a cause for concern. His remarks come at a time when the Trump administration is ramping up the pressure for rate cuts. Trump has repeatedly called for rate cuts, arguing there is “no inflation” and saying that a cut would lower the government’s interest payments on its $37 trillion in debt.

Powell was speaking at the Fed’s annual economic symposium in Jackson Hole, Wyoming, a conference with about 100 academics, economists, and central bank officials from around the world.

Top gainers & losers

American Express was the top gainer around this time and shot-up 3.5% and was followed by Caterpillar Inc., Home Depot Inc., Nike Inc. and Sherwin-Williams which were up over 3%, each. Among the top losers were Walmart Inc., Johnson & Johnson, Coca-Cola Co. and Verizon Communications Inc. which were down between 1.25% and 0.10%.

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