Federal Reserve Chair Jerome Powell on Friday said that the “balance of risks appears to be shifting” in the U.S. economy, as central bank policymakers weigh labor market conditions and inflation data ahead of their next interest rate decision in mid-September.

Powell spoke at the annual monetary policy conference hosted by the Kansas City Fed in Jackson Hole, Wyoming, in what is expected to be his final address at the event as Fed chair. The event comes following a series of inflation prints showing consumer prices trending higher and further away from the Fed’s 2% target, as well as a weaker-than-expected July jobs report that included large downward revisions to employment in May and June.

The Federal Reserve chairman said that downside risks to the labor market appear to be rising while economic growth slowed in the first half of the year due to slower consumer spending, and added that tariffs have begun to push consumer prices higher – raising the risk of higher inflation, though longer-term inflation expectations are still well-anchored.

“While the labor market appears to be in balance, it is a curious kind of balance that results from a marked slowing in both the supply of and demand for workers,” Powell said. “This unusual situation suggests that downside risks to employment are rising, and if those risks materialize, they can do so quickly in the form of sharply higher layoffs and rising unemployment.”

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“The effects of tariffs on consumer prices are now clearly visible. We expect those effects to accumulate over coming months, with high uncertainty about both timing and amounts. The question that matters for monetary policy is whether these price increases are likely to materially raise the risk of an ongoing inflation problem,” Powell said.

“A reasonable base case is that the effects will be relatively short-lived, a one-time shift in the price level. Of course, one time does not mean all at once. It will continue to take time for tariff increases to work their way through supply chains and distribution networks. Moreover, tariff rates continue to evolve, potentially prolonging the adjustment process,” he said.

“It’s also possible, however, that the upward pressure on prices front tariffs could spur a more lasting inflation dynamic , and that is a risk to be assessed and managed.”

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Powell said that the risk of a wage-price spiral driven by workers requesting and receiving higher wages to offset the impact of higher prices on household budgets appears low, given the softening labor market conditions. He added that inflation expectations over the longer-term have remained “well-anchored and consistent with our longer-run inflation objective of 2%.”

“Of course, we cannot allow the stability of inflation expectations for granted. Come what may, we will not allow a one-time increase in the price level to become an ongoing inflation problem,” Powell added.

“So putting the pieces together, what are the implications for monetary policy? In the near term, risks to inflation are tilted to the upside and risks to employment to the downside – a challenging situation. When our goals are in tension like this, our framework calls for us to balance both sides of our dual mandate,” he said.

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Powell noted that after the Federal Open Market Committee (FOMC) lowered the benchmark federal funds rate by 100 basis points last year, the Fed has room to maneuver as it brings rates back to a neutral level with the labor market still showing signs of durability based on some metrics.

“Our policy rate is now 100 basis points closer to neutral than it was a year ago, and the stability of the unemployment rate and other labor market measures allows us to proceed carefully as we consider changes to our policy stance,” he explained. “Nonetheless, with policy in restrictive territory, the baseline outlook and the shifting balance of risks may warrant adjusting our policy stance.”

“Monetary policy is not on a preset course. FOMC members will make these decisions based solely on their assessment of the data and its implications for the economic outlook and the balance of risks. We will never deviate from that approach,” Powell said.

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The stock market rallied in response to Powell’s speech, with major indexes up over 1% as expectations for a September interest rate cut rose.

“Labor-market weakness appears to have outweighed inflation risk for the Fed, and the markets’ initial response speaks for itself,” said Ellen Zentner, chief economic strategist for Morgan Stanley Wealth Management. “Longer term, the debate about how far and fast the Fed will cut rates is just beginning. Chairman Powell reaffirmed the 2% inflation target, and with tariffs still working their way through the economy, the Fed avoided declaring victory on that portion of its mandate.”

Seema Shah, chief global strategist at Principal Asset Management, said that while Powell’s speech “clearly leaned dovish, his remarks signal that a 25-basis-point cut is valid, but a 50-basis-point cut is not.”

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“Certainly, while the case for easing has strengthened, there is little economic justification for an emergency-sized 50 basis point cut. Should the Fed opt for such a move, markets may interpret it as a sign of political influence rather than data-driven decision-making. This could push inflation expectations and term premia higher, driving long-end yields up and undermining the very conditions that have support risk assets,” Shah explained.

U.S. stocks rallied Thursday after a fresh read on jobless claims eased investor concerns about a looming recession and fueled what’s been a wild week for financial markets.

The Nasdaq Composite, which recently fell into correction territory, rose nearly 3%, helped by Nvidia, Intel and Palantir shares. The tech-heavy index is still below its all-time high of 18,647 reached in July.

Ticker Security Last Change Change % I:COMP NASDAQ COMPOSITE INDEX 21527.227943 +426.92 +2.02% NVDA NVIDIA CORP. 178.22 +3.24 +1.85% INTC INTEL CORP. 24.92 +1.42 +6.04% PLTR PALANTIR TECHNOLOGIES INC. 160.60 +4.42 +2.83%

The S&P 500, the broadest measure of the stock market, rose over 2% in its best session since February. Technology, consumer discretionary and industrials led the gains while consumer staples and utilities — the more defensive plays — rose the least.

Ticker Security Last Change Change % SP500 S&P 500 6475.93 +105.76 +1.66% XLY CONSUMER DISCRETIONARY SELECT SECTOR SPDR ETF 226.23 -1.35 -0.59% XLI INDUSTRIAL SELECT SECTOR SPDR ETF 150.68 -0.54 -0.36% XLV HEALTH CARE SELECT SECTOR SPDR ETF 137.04 -0.46 -0.33% XLU UTILITIES SELECT SECTOR SPDR ETF 85.58 -0.59 -0.68%

And the Dow Jones Industrial Average, which fell a dramatic 1,033 points on Monday, clawed back by rising 683 points.

Dow Jones Industrial Average

All of the Dow 30 members rose, led by Intel, Salesforce and Caterpillar, while Disney and Walgreens rose the least.

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Ticker Security Last Change Change % CRM SALESFORCE INC. 245.83 -0.62 -0.25% CAT CATERPILLAR INC. 437.56 +19.84 +4.75% AMGN AMGEN INC. 295.76 -0.69 -0.23% DIS THE WALT DISNEY CO. 116.21 -0.83 -0.71% WBA WALGREENS BOOTS ALLIANCE INC. 12.19 -0.01 -0.08%

INSIDE THE MOST RECENT JOBLESS CLAIMS DATA

Fewer Americans filed for weekly jobless benefits, falling from a one-year high, giving investors a bit of relief that the job market remains steady. A surprise pop in claims a week ago, combined with a softer July jobs report, with just 114,000 positions added and an uptick in unemployment to 4.3%, sparked concerns of a bubbling recession.

It also triggered the so-called “Sahm Rule” — when the three-month moving average of the unemployment rate is 0.5% below the 12-month low, an accurate recession predictor.

Speaking to FOX Business, Claudia Sahm, the chief economist at New Century Advisors, cautioned investors to take in more data before jumping the gun.

“A recession is a broad-based contraction economic activity, so I think we need to see more signs of it. I don’t think we need to see more signs to have say policymakers act, like the Federal Reserve. In terms of really saying this is a recession, we are not there. Frankly, if the labor market data continues to worsen, that is a very negative sign,” she said during a Wednesday appearance on “Making Money” with Charles Payne.

Every job data point between now and the Federal Reserve’s September meeting will be under the microscope. More than 50% of market watchers are predicting that policymakers will kick in a bigger rate cut, likely as much as 50 basis points, according to the CME’s FedWatch Tool, which tracks the probability of rate moves.

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As stocks rebounded, bond yields rose, with the 10-year Treasury returning to 4%.

Cryptocurrencies also marched higher, with bitcoin nearing $60,000 after falling as low as $50,000 amid this week’s volatility.

Canada announced on Friday that it will remove many of the retaliatory tariffs imposed on U.S. goods as a sign of goodwill aimed at resuming trade talks that have stalled.

Canadian tariffs on goods that are compliant with the U.S.-Mexico-Canada Agreement (USMCA) will be lifted under the move, while tariffs imposed on U.S. autos, steel and aluminum will remain in effect for now.

“In this context and consistent with Canada’s commitment to USMCA, I am announcing today that the Canadian government will now match the United States by removing all of Canada’s tariffs on U.S. goods specifically covered under USMCA,” Canadian Prime Minister Mark Carney said at a press conference in Ottawa.

“Canada and the U.S. have now re-established free trade for the vast majority of our goods,” Carney added. he also emphasized that compared with trading partners, Canadian exports are still subject to a relatively low level of U.S. tariffs.

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“Canada currently has the best trade deal with the United States. And while it’s different from what we had before, it’s still better than that of any other country,” Carney said.

Carney said that President Donald Trump told him the move would kick-start trade negotiations that have stalled.

“We welcome this move by Canada, which is long overdue,” a White House official told FOX News. “We look forward to continuing our discussions with Canada on the Administration’s trade and national security concerns.”

The Canadian government in late June scrapped plans for a digital services tax that sparked outrcry from U.S. companies, particularly in the tech sector, in an effort to remove a potentially thorny issue from trade negotiations.

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Last month, Carney and his government also dropped talk of further escalating tariffs on the U.S. if the two countries weren’t able to reach a deal by Aug. 1.

The U.S. and Canada have consistently been each other’s largest or second-largest trading partners, with the Office of the U.S. Trade Representative noting that Canada was the leading destination for U.S. exports in 2024, and the third-largest source of imported goods. Canada exported over three-quarters of its goods to the U.S. and nearly half of its imports came from the U.S.

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The main U.S. exports to Canada are vehicles, machinery and energy products, along with about $30 billion in agricultural goods.

Canada’s primary exports to the U.S. are energy products and vehicles, plus more than $40 billion in agricultural goods.

Fox News’ Patrick Ward and Reuters contributed to this report.

Elon Musk’s social media company X Corp has reached a tentative agreement to settle a lawsuit filed by former employees of the company that was then known as Twitter, who argued they were owed $500 million in severance pay.

Both sides disclosed the deal on Wednesday in a court filing, with both asking a U.S. appeals court to delay an upcoming hearing to allow them to finalize a deal to pay the terminated workers and bring the case to a close. The 9th U.S. Circuit Court of Appeals agreed on Thursday to postpone the hearing.

The San Francisco court was scheduled to hear oral arguments on September 17.

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The financial terms of the agreement were not disclosed. The settlement would resolve a proposed class action lawsuit filed by former employees Courtney McMillian and Ronald Cooper.

A federal judge dismissed the employees’ lawsuit last year, but they appealed to the 9th Circuit.

Roughly 6,000 employees were terminated after Musk’s acquisition in 2022 of the social media giant, which he later rebranded to X, as part of a cost-cutting measure.

Several former employees sued the company over their firings and severance pay.

The lawsuit brought by McMillian and Cooper argued that a 2019 severance plan guaranteed that most workers would receive two months of their base pay plus one week of pay for each full year of service if they were terminated.

The complaint said senior employees like McMillian, who oversaw the company’s employee benefits programs, were owed six months of base pay.

However, the company only offered fired workers one month of severance pay at most, and many of them did not receive anything, the lawsuit says.

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Other lawsuits, including one filed by executives such as former CEO Parag Agrawal, are still pending in court.

Musk’s efforts to cut the company’s workforce came before he led similar cost-cutting measures in his time at the Trump administration’s Department of Government Efficiency, or DOGE, which cut tens of thousands of government employees earlier this year as it attempted to downsize the federal workforce.

Reuters contributed to this report.

Many veterans face challenges when transitioning from the military to civilian life, and one program aims to help them find a renewed sense of purpose through entrepreneurship.

Semper Fi & America’s Fund – a California-based nonprofit that offers a range of programs to help former service members – has an apprenticeship program that supports veterans in launching businesses by providing education, guidance and financial assistance, according to program director Casey Fisher.

“Veterans face two challenges as they leave the military and pursue entrepreneurship,” Fisher told FOX Business. “One is lack of funding… Two is the sense that they are by themselves.”

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The apprenticeship program, created around a decade ago, is approximately 12 months long and has about 25 graduates each year. Since its inception, around 250 veterans have graduated from the program, according to Fisher, who has worked at the nonprofit for more than 13 years.

Businesses launched through the apprenticeship program include food trucks, gyms, online shops and comic book stores, according to Fisher.

“You name it,” he said, adding that veterans frequently have a natural edge when it comes to entrepreneurship due to the principles they are taught in the military. “We probably have somebody that’s tried it, and it’s been successful.”

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When working with veterans, Fisher said the program focuses first on finding out what motivates them.

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A team of advisors then works with program participants to offer a “crash course” in entrepreneurship – covering subjects like finance and marketing – as many former service members come to the program with limited knowledge of business fundamentals, Fisher said.

Once participants reach a place where they can create comprehensive business plans, they can then be granted money to cover the cost of tools, equipment and training, among other essentials, he said.

“We like to think of it as putting ether in the engine,” Fisher said. “If you don’t have the tools to run your woodworking business, well, we can start to develop what that looks like.”

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Semper Fi & America’s Fund was founded in 2003 by military spouses to support those injured while serving in Afghanistan and Iraq. Today, the nonprofit is operated by those same spouses and provides care to service members, veterans and military families, according to its website.

“There is still a massive need,” Fisher said. “Post-traumatic stress may not present itself for 20 years and you don’t know it. We want to be there for a lifetime of support.”