The S&P 500 rose 1% after Fed Chairman Jerome Powell said it was time to cut interest rates from a two-decade high. The Dow Jones Industrial Average rose 305 points, or 0.7%, as of 10:05 a.m. Eastern Time, and the Nasdaq Composite was 1.4% higher.

The Fed began raising interest rates sharply more than two years ago, when inflation was rising to its highest level in more than 40 years. Its goal was to make credit so expensive for U.S. households and businesses that it would slow the economy and dampen inflation.

While Powell was keen to stress that the job is not yet complete, he used the past tense to describe many of the conditions that drove inflation higher after the pandemic, including a labor market that is “no longer overheated.” That means the Fed can focus more on its other dual mission: protecting the labor market and keeping an economy humming that has so far exceeded many recession predictions.

“It is time to adjust policy,” Powell said. “The direction is clear, and the timing and pace of rate cuts will depend on incoming data, the evolving outlook and the allocation of risks.”

However, this second part of his statement contained some details that Wall Street was dying to hear.

US Treasury yields had already fallen sharply in the bond market since April amid expectations that the Federal Reserve’s next move would be to cut its benchmark interest rate for the first time since 2020. The only questions were how much the Fed would cut and how quickly it would act.

One danger is that traders have set their expectations too high, as they have often done in the past. Traders think it is very likely that the Fed will cut its benchmark interest rate by a percentage point by the end of the year, according to data from CME Group. To do so, the Fed would have to go above the usual quarter-percentage point at least once in its three remaining meetings this year.

If their predictions are wrong, which also happens frequently, it could mean that Treasury yields have already fallen too far since their decline in the spring. That, in turn, could put pressure on all kinds of investments. On Thursday, for example, the S&P 500 posted its biggest loss in more than two weeks after Treasury yields rose.

Meanwhile, stronger-than-expected earnings reports from several companies are helping to support the market.

Ross Stores climbed 3.4 percent after the company beat analysts’ earnings and revenue estimates last quarter, but CEO Barbara Rentler also said the retailer’s low- and middle-income customers continue to feel the pressure of high prices across the economy, even as inflation has eased.

Workday rose 11.2 percent after also reporting better earnings and revenue than analysts had forecast. The company, which helps companies manage their employees and finances, also raised its forecast for profitability this year.

They helped offset a 9.8 percent drop at Red Robin Gourmet Burgers, which reported an even wider-than-expected loss for the latest quarter. The company also cut its revenue forecast for this year amid what it described as a downturn in the overall restaurant industry.

In the bond market, the yield on 10-year U.S. Treasury notes fell to 3.80 percent from 3.86 percent late Thursday. The yield on two-year Treasury notes, which is more closely tied to expectations for Fed action, fell to 3.95 percent from 4.01 percent late Thursday.

On foreign stock markets, indices were slightly higher in Europe after leading to mixed closing prices in Asia.

The Nikkei 225 rose 0.4 percent in Tokyo after Bank of Japan Governor Kazuo Ueda indicated that there may be further, albeit gradual, interest rate hikes.

The Bank of Japan has triggered a frightening summer slump in financial markets around the world after a rate hike forced many hedge funds and other investors to suddenly abandon a popular trade of borrowing cheap Japanese yen to invest elsewhere. A subsequent pledge by a senior bank official not to raise rates again while markets remain unstable helped calm markets.

The S&P 500 is less than 1 percent below its all-time high hit last month, after briefly falling nearly 10 percent below the mark.