By CCN.com: Fed Chairman Jerome Powell isn’t about to let the stock market crumble on his watch. The Dow took the hint, responding positively to Powell’s measured opening address during a two-day meeting at the Chicago Fed. By the end of the day, the Dow tacked on more than 500 points, reportedly making it the second-best performance this year.

Powell referred to the trade issues and committed to acting “as appropriate to sustain the expansion,” saying:

“We do not know how or when these issues will be resolved. We are closely monitoring the implications for the U.S. economic outlook.”

Investor sentiment turned around sharply from its gloomy start to the week. Market participants interpreted his comments as supportive of rate cuts if these are necessary to keep the U.S. economy on track.

Fed Gives the Dow a Reason to Rally

The Dow Jones Industrial Average moved firmly into the green in the wake of Powell’s address, gaining 2%. The Nasdaq added close to 2%. Tech stocks led the charge, with Apple up almost 3% and Netflix about 5%. These increases reversed some of yesterday’s losses on worries about whether antitrust regulators will look into the competition between big internet companies.

Fed Has Little Wiggle Room

Powell didn’t refer directly to whether rates were likely to decline this year, but it was enough to send stocks higher.

“The focus on the median forecast amounts to what the typical Federal Open Market Committee participant would do if things went as expected. But we’ve been living in times characterized by large, frequent, unexpected changes in the structure of the underlying economy. “In this environment, the most important policy message may be about how the Fed will respond to the unexpected rather than what it will do if there are no surprises.”

Fed Expected to Cut Rates

According to the CME’s FedWatch tool, market expectations for an interest rate cut at the July meeting are 65%. By December, the chance of an interest rate cut soars to 98%, reports CNN Business.

Over the past week, expectations of a rate cut have been growing. Some commentators have speculated that there could be as many as three rate cuts.

CNN Business reports that Powell’s remarks came a day after St. Louis Fed President James Bullard said the central bank might need to cut interest rates soon amid concerns about weak inflation and risks to economic growth. Although Powell didn’t echo Bullard’s more explicit expectation for a rate cut, investors seem to have heard all they needed to hear.