Jerome H. Powell said the “balance of risks” across the economy had started to shift, raising the odds the central bank lowers borrowing costs at its next meeting in September.

John Luke Tyner, head of fixed income at Aptus Capital Advisors, said Powell has accepted the market's argument that the labor market is weakening and that it is a larger threat to the economy than tariff-related inflation.

Federal Reserve chairman Jerome Powell signaled a possible interest rate cut in the months to come, sending stocks sharply higher.