Fed Chair Jerome Powell just handed Wall Street a high-stakes bet: he’s willing to tolerate higher inflation in the short run if it means keeping the labor market afloat.
- DIA ETF hit new all-time highs after Powell’s speech. Check the chart here.
And investors? They’re running with it.
In a move that surprised many, the Fed chair used his Jackson Hole speech to lean decisively into a dovish stance, making it clear that avoiding further damage to job creation is now the Fed’s top concern—even if that means letting inflation move above 2%.
“The baseline outlook and shifting balance of risks may warrant adjusting our policy stance,” Powell said, hinting strongly at a September rate cut.
For the markets, this was all they needed.
Stocks exploded higher, speculative names led the charge, and the “Everything Rally”—a rare environment where nearly all risk assets rise together—roared back to life.
The S&P 500 – as tracked by the Vanguard S&P 500 ETF (NYSE:VOO) – rose 1.55% to new record highs on Friday, …