BofA warns Fed risks policy mistake with early rate cuts
Investing.com -- Homebuilder stocks rallied on Friday after Federal Reserve Chair Jerome Powell hinted at a possible interest rate cut in September during his remarks at the Jackson Hole Symposium.
Rocket Companies (NYSE:RKT) stock jumped 8%, leading gains among housing-related stocks. Mr. Cooper Group (NASDAQ:COOP) shares climbed 6%, while Beazer Homes (NYSE:BZH) also rose 6%. Other homebuilders saw significant gains as well, with KB Home (NYSE:KBH) and Lennar (NYSE:LEN) rising 4% each, while PulteGroup (NYSE:PHM) and D.R. Horton (NYSE:DHI) both added 3%.
The rally came after Powell’s closely watched speech at the annual economic conference in Wyoming, where he indicated the Fed might lower interest rates at its next policy meeting. While the Fed chair acknowledged growing risks to the labor market, he stopped short of making a firm commitment to cutting rates, noting that inflation risks remain.
Powell’s comments helped extend gains in the broader U.S. stock indexes on Friday, as investors interpreted his remarks as a signal that the central bank is preparing to ease its tight monetary policy. The housing sector is particularly sensitive to interest rate changes, as lower rates typically reduce mortgage costs and stimulate home buying activity.
The potential rate cut would mark a significant shift in the Fed’s policy after a prolonged period of elevated interest rates aimed at combating inflation.
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