S&P500 Forecast: Bulls Target 6,500 After Powell Fuels Stock Market Surge

Dow Rockets 900 Points to New Record as Powell Sparks Rate Cut Bets; S&P 500 Eyes Breakout

Stocks surged Friday, with the Dow Jones Industrial Average jumping 903 points (2%) to close at a record high after Fed Chair Jerome Powell hinted the central bank may cut rates as soon as September. The S&P 500 gained 1.56% to finish at 6,469.47, just shy of its all-time high, while the Nasdaq added nearly 2% in a broad-based rally fueled by cooling inflation expectations and fresh optimism around Fed policy.

What did Powell say that fired up the bulls?

Powell’s speech at Jackson Hole wasn’t flashy—but it didn’t need to be. The market zeroed in on his comment that the “balance of risks” has shifted between inflation and employment, a signal that the Fed could be nearing the start of a rate-cutting cycle.

Traders immediately priced in a 91% chance of a 25-basis-point cut next month, up from 75% earlier in the week, according to CME’s FedWatch.

Put simply, Powell gave the market just enough to believe the Fed put is alive and well.

Which sectors led the charge?

Homebuilders took the lead as falling rate expectations revived the housing trade. Builders FirstSource surged 8%, Mohawk Industries jumped 7%, and Lennar added over 5%. The iShares U.S. Home Construction ETF (ITB) tacked on more than 5%, with rate-sensitive names drawing buyers.

Financials joined the party too. Goldman Sachs and American Express gained nearly 4%, while regional banks ripped higher—SPDR’s KRE ETF climbed more than 4% as lower rates could ease funding pressures.

Semis and megacap tech rallied in sync with the broader move. Nvidia (+2%), Broadcom (+3%), and Microchip Technology (+6%) all saw strong buying, helping lift the tech-heavy Nasdaq. Zoom Communications popped 10% on strong earnings, while Tesla gained 5% as risk appetite returned.

Where is the S&P 500 heading from here?

Here’s where things get interesting. The S&P 500 stopped just short of its recent high at 6,481.34, set last week. That’s your near-term ceiling. If bulls can push through and close above it with volume, it opens the door to 6,500 and possibly 6,600, in line with updated year-end targets from firms like UBS.

On the downside, the first floor sits at 6,343.86, with stronger support near the 50-day moving average at 6,269.6. Any break below that zone would raise questions about the sustainability of the rally.

What’s next on the radar?

Now it’s all about confirmation. We’ll need to see how the market handles next week’s economic data—especially the August PCE inflation report and jobless claims. Until then, traders will be watching if buyers show up at pullbacks or if today was just a squeeze on low summer volume.

More likely than not, the market wants to keep pressing higher—but as always, we’ll see how that plays out.

More Information in our Economic Calendar.