• Federal Reserve Chairman Powell signaled in Jackson Hole that an interest rate cut was imminent.
• The majority of the market is expecting a 25 basis point cut, but a third of the market still thinks Powell will start with a 50 basis point cut.
• Powell believes the labor market is no longer a source of inflation.
• Goldman shares are approaching an all-time high of $517.26, but there are plenty of entry points.

Goldman Sachs (GS) gained on Friday along with US indices after the market took to heart Federal Reserve (Fed) Chairman Jerome Powell’s words about interest rate cuts at the September 18 meeting.

Shares of the esteemed investment bank rose nearly 3% to an intraday high of $512.44 just before lunch.

The Dow Jones Industrial Average, of which Goldman is a particularly prominent member, rose half a percentage point, while the NASDAQ and S&P 500 posted similar gains.

Dow Jones jumps after Fed gives green delicate to interest rate cut

Jackson Hole, Powell press conference lift market

Solid news plays second fiddle on days like Friday, when the market was discovering greater certainty that interest rates would arrive in less than a month. The anticipation was already there, but Powell’s candid remarks reinforced the existing sentiment.

CME Group’s FedWatch tool estimates the probability of a 25 basis point cut at the September meeting to be 66%, and the probability of a 50 basis point cut to be 34%.

“The time to adjust policy is now,” Powell told a packed audience at the Jackson Hole Economic Symposium in Wyoming. “The direction of travel is clear, and the timing and pace of rate cuts will depend on incoming data, the changing outlook and the balance of risks.”

Allianz’s Charlie Ripley focused on Powell’s observation that the labor market is unlikely to be a source of inflation in the medium term.

“While the pace and scale [of the cuts] “While it’s not yet established,” Ripley wrote in a note to a client, “it’s been very clear that the focus has shifted toward the labor market and the broader trajectory of the U.S. economy.”

There wasn’t much in the headlines at Goldman this week, aside from a subtle embarrassment over hedge fund Citadel hiring Ken Griffin as the bank’s chief technology officer. Atte Lahtiranta has been with Goldman since 2019 and will now become Citadel’s chief trading and risk algorithm officer.

Goldman Sachs Stock Chart

Goldman’s stock is up about 31% this year already, so most traders will want to wait for a pullback before going long. Of course, if GS shares break above $517.26, the July 31 high, they’ll miss out.

The main focus for bulls is the 50-day elementary moving average (SMA), which is hovering near $480. Below that is the previous resistance of $471 from May and the summer support level of $440, which was high in both June and early August.

Goldman Sachs Daily Stock Chart