Powell's "dovish" arrival as scheduled, the market responded with excitement and jubilation.

In most of this month, Wall Street traders have been pouring into the stock and bond markets, betting on the Federal Reserve's readiness to cut interest rates again, and waiting for clear signals of easing from Federal Reserve Chairman Jerome Powell. On Friday, Powell delivered a dovish message as expected in a major speech, triggering the most intense cross-market rally since April. US Treasury bond prices rose, with the two-year Treasury yield falling by 12 basis points at one point, as futures traders began betting heavily on the likelihood of a rate cut in September after Powell said, "The changing risk balance could require a policy stance adjustment." The S&P 500 index rebounded from five consecutive days of decline, rising by 1.5% and closing near its all-time high. Meanwhile, driven by interest rates and economically sensitive stocks, the Russell 2000 index surged by nearly 4%. The US dollar fell, while risk assets like Bitcoin rose, as the market expected the Fed to stimulate economic growth through its policies. Gold rose by 1%. With Powell opening the door to rate cuts, US stocks and bonds rose sharply. Matt Maley, chief market strategist at Miller Tabak + Co LLC, said, "This is an important shift for Chairman Powell. The issue the market faces now is whether concerns about slowing economic growth will lead to lower corporate profits, but the Fed won't have a major negative impact on investors." Powell's speech at the annual Jackson Hole symposium in Wyoming has been closely watched by the financial markets. Earlier this month, the market had already priced in the expectation of a 25 basis point rate cut at the next month's meeting, the first cut since December last year. Due to weak job market growth, some option traders are even betting on a 50 basis point cut, which is usually only taken in emergencies. This speculation ignited risk sentiment, driving the stock market to new highs late last week, despite concerns about US President Donald Trump's trade war slowing economic growth, and concerns that large technology stocks fueling the stock market rally have risen too high. As of writing, the S&P 500 index has rebounded by over 30% from its lows in early April, when Trump's tariff policy briefly sent the market into chaos. However, in the past few days, doubts about the Fed's next move have begun to emerge, with some Fed officials warning that a rate cut in September is not a done deal. The stock market stalled after data showed inflation accelerating to the largest increase in three years in July. Deflation concerns resurfaced, leading to five consecutive days of decline in the S&P 500 index and pushing up US Treasury yields. After Powell hinted at a shift in Fed policy, market sentiment reversed. This is reminiscent of the situation at the Jackson Hole conference a year ago when Powell said the Fed was prepared to gradually lower interest rates, bringing them down from their highest levels in over 20 years. On Friday evening, Fitch Ratings confirmed the US credit rating at AA+, with a stable outlook. This did not change the market trend, but it may help prove that traders' optimistic sentiment is justified. With Trump's policies increasing economic uncertainty, the Fed has kept rates unchanged until 2025, as Powell tries to balance the risks of accelerating inflation with slowing economic growth. While earlier employment data this month showed the US labor market weaker than expected, other indicators suggest that the economy still has some resilience, with corporate profits continuing to boost optimism in the stock market. The Fed is facing unprecedented pressure from Trump. Trump, breaking from tradition, has shown little respect for the Fed's autonomy. He has criticized Powell for not cutting rates and threatened to dismiss a Fed board member accused of mortgage fraud. Faced with this pressure, Powell seems eager to assure the market that the Fed will not let politics influence monetary policy. However, Trump seemed unimpressed with Powell's speech on Friday, telling reporters that the Fed should have cut rates a year ago. Trump said, "We called him 'too late' for a reason." Since the outbreak of the pandemic, the market has repeatedly prematurely anticipated the Fed's policy adjustment. Powell has consistently emphasized that the Fed is making data-dependent decisions, making it still difficult to predict the Fed's rate cut trajectory in the next few months. Dan Carter, portfolio manager at Fort Washington Investment Advisors, said that even with Powell's more dovish tone, there are risks with the data in the coming weeks. He said, "The market will like this change in tone. But I think we have to be careful not to get too far ahead. There is still a lot of data to consider between now and the next Federal Open Market Committee meeting."