(Updates with U.S. midday trading, adds SAN FRANCISCO to

dateline)

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Powell opens door to September rate cut but does not

commit

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Fed chair has faced barbs from President Trump

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Shares rally over 1%, 2-year Treasury yields down 10 basis

points

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Dollar falls, oil edges up

By Alun John and Noel Randewich

LONDON/SAN FRANCISCO, Aug 22 (Reuters) - Stocks climbed

and U.S. Treasury yields and the dollar fell on Friday after

Federal Reserve Chair Jerome Powell pointed to a possible rate

cut at the central bank's September meeting.

Wall Street shares rallied after Powell stopped short of

committing to cutting interest rates as he acknowledged growing

risks to the job market while also saying risks of higher

inflation remain.

His remarks, to the annual central banking symposium at

Jackson Hole, are his final address as chair of the Fed.

The S&P 500 and Nasdaq Composite rose 1.5%

and 1.7%, respectively. The Dow Jones Industrial Average

jumped 2.2% to a record intraday high.

Government bonds also welcomed the news with the

rate-sensitive two-year Treasury yield down nearly 10 basis

points at 3.69%. Benchmark 10-year yields fell 6 bps

to 4.27%.

Powell's past speeches at the event have often moved

markets, and this year's remarks are under particularly close

scrutiny as his position has come under heavy criticism from

U.S. President Donald Trump, sparking concerns about potential

threats to the Fed's independence.

His comments open the door to a rate cut at the Fed's

September 16-17 meeting, and while he put heavy weight on jobs

and inflation reports that will be received before then,

analysts said Powell appeared to be putting greater weight on

the former.

"Given Powell's surprisingly dovish comments, it makes sense

that both stocks and bonds are up significantly today," said Tom

Graff, chief investment officer at Facet.

"However, looking over the next couple months, rate cuts

alone won't be enough to sustain strength in stocks. The rate

cuts will have to 'work' in the sense that the economy regains

momentum," Graff added.

Powell offered little guidance about how soon or how quickly

rates might continue to move lower, likely stoking further

pressure from Trump, who contends there is no risk of inflation

and that the Fed should slash rates immediately.

European markets echoed the moves by their U.S. peers, but

in a more muted manner.

Europe's broad STOXX 600 index climbed 0.4%, while

Germany's 10-year yield, the euro zone benchmark, was down 3 bps

at 2.72%.

The dollar index, which measures the greenback

against a basket of currencies including the yen and the euro,

was last down 0.89% on the day at 97.73, after trading around

98.7 before Powell's comments.

The euro gained 0.97% to $1.1717. Against the

Japanese yen, the dollar weakened 1.1% to

146.74.

CHINA TECH

Earlier in the day, the focus was on Chinese shares and the CSI

300 Index gained 2.1%, after DeepSeek released an

upgrade to its flagship V3 AI model and Reuters reported that

Nvidia ( NVDA ) had asked Foxconn to suspend work on

the H20 AI chip, lending support to Chinese rivals.

Tech stocks listed in Hong Kong rose 2.7%.

Also in Asia, Japanese data showed core consumer prices slowed

for a second straight month in July but stayed above the central

bank's 2% target, keeping alive expectations for a rate hike in

the coming months.

Oil prices nudged up, with Brent crude futures up 18

cents at $67.85 a barrel following strong gains on Thursday as

Russia and Ukraine blamed each other for a stalled peace

process. U.S. crude was up a similar amount at $63.78.

Gold also gained, with spot bullion up about 1% at

$3,370 per ounce.