Wall Street rallies as Powell hints at September rate cut, fueling surge in speculative trades
US stocks rocketed higher Friday after Federal Reserve Chair Jerome Powell signaled that a rate cut could come as soon as September, a dovish shift that sent riskier corners of the market into overdrive—from meme stocks to cryptocurrencies.
“The baseline outlook and the shifting balance of risks may warrant adjusting our policy stance,” Powell said at Jackson Hole.
That was all markets needed to hear. “Powell clearly opens the door for a September cut,” Oxford Economics chief US economist Ryan Sweet wrote. “When Fed chairs open the door for a rate cut, it’s quite difficult to close.”
The promise of cheaper borrowing sparked a wave of speculative buying.
Risk-on trade ignites
Opendoor (OPEN), a retail investor favorite often grouped with meme stocks, soared nearly 40% as traders bet lower mortgage rates could revive housing activity.
Crypto staged an even sharper comeback. Ethereum (ETH-USD) surged 14% on Friday, handily beating bitcoin’s (BTC-USD) 4% rise. Solana (SOL-USD) gained 10%, while XRP (XRP-USD) added 7%.
That strength spilled into crypto-adjacent equities as well: Coinbase (COIN) jumped 6%, Robinhood (HOOD) rose 3%, and MicroStrategy (MSTR) advanced 6%.
The surge marked a stark reversal after weeks of doubt about the staying power of speculative assets and the AI-driven tech trade.
Rally spreads beyond Big Tech
Citi’s Scott Chronert highlighted the Russell 2000 (^RUT) as the day’s standout, calling its rally the most “striking” evidence that money is rotating into smaller, more cyclical companies.
The equal-weighted S&P 500—where all stocks carry the same weight instead of being dominated by megacap tech—also outperformed the traditional index, another sign that leadership is broadening beyond the tech giants that have carried the market for much of the past two years.
Federal Reserve Chair Jerome Powell walks through Grand Teton National Park on August 22, 2025, during the annual Jackson Hole gathering in Wyoming.
But Chronert cautioned the early stages of this rally leaned heavily on riskier names: “There is some ‘junkiness’ to this initial reaction. Speculative/non-earners in growth sectors outperformed.”
Indeed, Goldman Sachs’ Non-Profitable Tech Index—tracking companies with no GAAP profits—rose 4% Friday. The index has now rebounded more than 65% from its April lows, putting it just shy of recent highs. UBS’s Meme Stock basket also hit a one-year peak.
Fundamentals still matter
Some strategists, however, argue that the rally isn’t purely speculative. Strong corporate earnings have underpinned equities, and lower rates may provide the final push.
“Ultimately, earnings drive stock prices higher,” said Lou Basenese, EVP of market strategy at Prairie Operating Co. and founder of TheBigSkinny.com. “If earnings growth is accelerating, it now brings those relative valuations back in line where people can buy confidently.”
Basenese added: “This is an economy and market that is ready to go much higher based upon the fundamentals. The big unknown has been interest rates.”
On Friday, Powell may have cleared up that uncertainty.