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Powell opens door to September rate cut but doesn't commit

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Fed chair has faced barbs from President Trump

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

points

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Dollar falls, oil edges up

(Updates throughout after Fed chair speech)

By Alun John

LONDON, Aug 22 (Reuters) - Stocks rose 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.

Powell stopped short of committing to cutting interest rates

as he tried to walk a narrow line acknowledging 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.

Share markets rallied in response to Powell's speech, and

the S&P 500 and Nasdaq Composite rose 1.4% and 1.6%

respectively. The Dow Jones Industrial Average

rose 1.6% 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.

"Chair Powell was able to talk about the balance of risk

shifting and therefore the potential of shifting of policy would

be appropriate," said Art Hogan, chief market strategist, B.

Riley Wealth.

"That's a clear hint that Chair Powell is open to supporting

rate cuts in the future."

But he 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 was last up 0.6%,

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

3 bps at 2.72%.

The comparatively larger fall in U.S. yields weighed on the

dollar, which was down 0.7% on the Japanese yen at 147.3 yen.

The euro rose 0.64% to $1.1683.

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 last trading

up 0.4% at $67.93 per 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 0.8% at $3,364

per ounce.