The Federal Reserve's annual symposium at Jackson Hole became a perfect place to put the final line under the doubts of Wall Street sceptics. Its chair Jerome Powell used a gas pedal on August 22, citing "downside risks to employment" in the U.S. economy. At the same time, he simply neglected to mention inflationary pressures that had previously peppered most of his previous speeches.

Powell clearly opened his set of remarks by offering an unequivocal sign to businesses and investors that the U.S. central bankers are going to reverse their too hawkish monetary course very soon. “The shifting balance of risks may warrant adjusting our policy stance", while labour markets remain "a curious kind of balance that results from a marked slowing in both the supply of and demand for workers”, he said, adding that this "unusual situation" suggests that more downside risks may materialize "quickly in the form of sharply higher layoffs and rising unemployment”. So the Fed showed that it didn't crack under U.S. president Donald Trump's public threats, but it is going to change its stance to show that the policy makers simply can't ignore the more than 250,000 payrolls revision over the past two months accompanied by weak, barely double-digit fresh Nonfarm payrolls.

The stock investors are just quick on the uptake when hearing exactly this type of language used by Fed officials. The S&P 500 major barometer had been on a slow and slight decline but for the four straight trading sessions from Monday to Thursday last week, something it hadn't done since early April's tariff worries, but briskly erased and covered all those losses in less than one hour, jumping 1.5% to respond to Powell's comments. Eventually, the index closed at 6,467.70, its highest level ever. The move opens the door to the new sky-high records.

Three weeks ago, the same crowd considered weak jobs as a blessing for earlier rate cuts. CME FedWatch tool showed a nearly unanimous opinion of futures traders who were clearly betting on the first rate cut in a new cycle as soon as the September meeting. That conviction was still strong but fell to 75% before Powell's speech because of some other Fed member's remarks and mixed producer price data. But this bet for at least 0.25% cut on September 17 comes to about 98% once again after the clearly dovish Powell. By mid-December, the crowd is confidently expecting a rate of 0.5% lower than now, i.e. within the range of 3.75% to 4.25%. "This is about as explicit a ’we’ll probably cut in September’-type statement as one can expect from the Fed chair," said analysts at Vital Knowledge. That's one perfect sentence for what actually happened.

As we've been talking for many months about price targets like 6,850 or even 7,000 for trading S&P 500 futures, right now even the most cautious representatives of the expert camp are agreeing with this concept of a large rally extension. And so, we have a rising bullish environment. As a good example, the UBS investment bank, which had previously held estimates around 6,500, is shifting its year-end S&P 500 target to 6,600 as a starter, with its renewed June 2026 target at 6,800. Goldman Sachs and JPMorgan, are talking about over 6,850 before the end of 2025 already. More rate cut expectations also switch a green light to the further weakening of the Greenback vs other reserve currencies, including the Euro.