Wall Street cheered Jerome Powell’s Jackson Hole address, sending stocks to new highs and boosting rate‑sensitive sectors, but some analysts fear investors are getting ahead of themselves. In his final speech as Fed chair, Powell acknowledged rising job‑market risks and hinted at a September rate cut but stopped short of firm commitments reuters.com. Traders now see a roughly 80 % chance of a quarter‑point cut in September, up from 70 % before the speech reuters.com. Treasury yields slid and the blue‑chip Dow closed at a record, while small‑cap and homebuilding shares surged reuters.com.
Yet warnings of stagflation—weak growth coupled with stubborn inflation—are growing louder. A burst of wholesale price data underscored lingering price pressures that could limit the Fed’s ability to cut rates aggressively reuters.com. MetLife’s Drew Matus cautioned that rate cuts alone “won’t be enough to sustain strength in stocks” if the economy stalls reuters.com. Others worry about political interference after President Trump said he would fire Fed Governor Lisa Cook if she doesn’t resign, raising fresh questions over the central bank’s independence reuters.com. While many investors are piling back into risky assets, strategists urge vigilance: the market is pricing in a near‑perfect scenario of lower rates and solid growth that may not materialize reuters.com.
