U.S. stocks closed sharply higher Friday after Federal Reserve Chair Jerome Powell signaled that the central bank is preparing to ease policy as soon as September, igniting a broad-based rally across Wall Street.

The Dow Jones Industrial Average gained 846.24 points, or 1.89%, to 45,631.7. The Nasdaq Composite climbed 396.22 points, or 1.88%, to 21,496.5, while the S&P 500 rose 96.73 points, or 1.52%, to 6,466.90. Gold and crude oil also advanced, with December gold futures adding nearly 1% to $3,415.00 and September crude settling 0.43% higher at $63.79.

The rally came on the heels of Powell’s closely watched remarks at the Jackson Hole symposium, where he underscored that inflation is “trending lower” and characterized tariff-driven price increases as temporary. In a notable shift from his July comments, Powell emphasized that policy is now “100 basis points closer to neutral than a year ago,” suggesting the Fed’s restrictive stance could soon be recalibrated.

Markets interpreted the speech as a decisive dovish turn. Futures pricing from the CME FedWatch tool showed the odds of a September rate cut surging to 91% from 72% before Powell spoke. Treasury yields fell at the short end of the curve as traders rushed to position for easing, while equities rallied, led by cyclical and growth names.

Powell also flagged growing labor market risks, noting that payroll growth has slowed to just 35,000 jobs per month over the past three months, down from 168,000 in 2024. He described the labor market as in a “curious balance,” warning of the risk of a sudden rise in layoffs if demand weakens further.

Beyond monetary policy, retailers continue to face economic headwinds. A recent report from the Bank of America Institute highlighted that product returns remain elevated, costing the industry an estimated $890 billion in 2024. Return rates in 2025 remain high at 4.5% year-to-date, straining margins already pressured by tariffs and economic uncertainty.

The combination of Powell’s reassurance and investor relief over the Fed’s dovish tone pushed major benchmarks to their strongest one-day performance in weeks. While upcoming labor and inflation data will shape the Fed’s September decision, markets left Friday convinced that a long-awaited pivot toward easier policy is at hand.