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The broader markets rose toward the weekend, reversing earlier losses as surprisingly dovish comments by Fed Chair Jerome Powell hinted at the possibility of a rate cut at Fed’s next month meeting scheduled for Sept. 16-17.
In his speech at the annual Jackson Hole, Wyoming, symposium, Powell left the door open to an interest-rate cut, saying, "The baseline outlook and the shifting balance of risks may warrant adjusting our policy stance."
The Fed's benchmark borrowing rate has remained in a range of 4.25%-4.5% since December 2024.
The optimism of a rate cut sparked a market surge, which pushed S&P 500 higher, recording its biggest gain since May as investors piled into shares that often perform well amid lower interest rates. Megacaps likewise gained alongside a number of small firms and banks.
Ripple CTO reacts
In a recent X conversation, an X user had pointed out that stocks of companies that were previously down based on dwindling short-term revenue were nearly up 10% on the news of potential rate cut signal by the Fed.
Ripple CTO David Schwartz reacted to this, saying, "I think this is a sign that the market cares much more about the potential for long-term growth than short-term revenue." This sentiment by the Ripple CTO holds across the crypto market, with traders often considering long-term potential despite short-term volatility.
Powell’s speech, which signaled the central bank may not wait for perfect inflation before reducing rates, turned out to be a surprise for markets, especially cryptocurrencies, which had mostly traded down this week as investors considered macroeconomic uncertainty.
The dollar fell and risk assets like Bitcoin rose, with Ethereum reaching an all-time high for the first time in nearly four years. XRP rose 6%, reclaiming $3 with a current market cap of $181 million.
Dan Burgin
Vladislav Sopov
U.Today Editorial Team